Microsoft reported robust free cash flow in its latest quarter, driven by increased revenue from its cloud and productivity segments and ongoing expense discipline. The strong cash generation enhances its capacity to fund R&D, strategic acquisitions and shareholder returns.

The company’s cloud business, led by Azure, delivered double-digit revenue growth and improved margins, making it the primary driver of overall cash flow expansion. Scale efficiencies and higher-value enterprise contracts further bolstered the segment’s operating cash conversion.

Morgan Stanley analyst Mike Wilson noted that corporate spending on AI remains in early stages, suggesting room for the current tech rally to extend. He identified Microsoft’s leadership in AI infrastructure and services as a key catalyst that could sustain share price momentum.