Welcome to Daily Stock's Nasdaq Story, where we uncover the hidden context of the tech stock market.
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Core Summary
Microsoft's (MSFT) core growth engine, Azure cloud, maintains strong growth momentum driven by AI demand.
The $627 billion Remaining Performance Obligation (RPO), confirmed in the recent earnings report, suggests that AI infrastructure is establishing itself as an essential enterprise utility. [1]
However, massive capital expenditures (CAPEX) exceeding $30 billion per quarter could return as a depreciation burden in the future. [1]
Coupled with the high volatility of the US 10-year Treasury yield (US10Y), it is time to carefully examine the valuation re-rating risks of Big Tech.
Current Situation Summary
As of 09:01 on May 25, 2026 (provisional intraday), the US Nasdaq index recorded 26,343.97, testing its settlement above the 26,000 mark.
In the Korean stock market, the KOSPI stands at 7,847.71 and the KOSDAQ at 1,161.13, while the KRW/USD exchange rate (linked to DXY) remains at a high level of 1,515.00 KRW.
According to Daily Stock's own Fear & Greed Index, the Nasdaq is currently at 58.6 (Neutral), indicating investor sentiment has cooled somewhat compared to 68.5 (Greed) one month ago.
The KOSPI Fear & Greed Index also currently records 57.3 (Neutral), down from 64.8 (Greed) a month ago, reflecting a sense of caution across the broader market.
With the US 10-year Treasury yield (US10Y) not easily backing down, the possibility of a localized rebound in the VIX (Volatility Index) is being raised.
Such a macro environment could trigger supply and demand differentiation between Nasdaq 100 large-cap tech stocks, which are making massive investments, and the Philadelphia Semiconductor Index (SOX).
Financial Analysis
According to Microsoft's recently announced earnings for the third quarter of fiscal year 2026 (Jan-Mar), the cloud segment, including Azure, beat market expectations. [1]
Notably, Azure's year-over-year growth rate recorded around 39-40%, with AI services analyzed to have driven a significant portion of this growth. [1]
The most striking metric is the surge in Remaining Performance Obligation (RPO), or backlog, reaching approximately $627 billion. [1]
This signifies that enterprise customers, including those with OpenAI-related contracts, are committing to long-term cloud usage.
On the other hand, capital expenditure (CAPEX) also hit roughly $31.9 billion per quarter, with astronomical capital being poured into data center expansion and securing AI chips. [1]
Concerns over slowing free cash flow (FCF) also coexist, as some analyses project approximately $190 billion in CAPEX over the next three quarters. [1]
| Key Financial Metrics (As of FY2026 Q3) | Figure & Status | Note |
|---|---|---|
| Azure Cloud Growth Rate | Approx. 39-40% (YoY) | Continuous rise in AI contribution |
| AI Annualized Run Rate | Approx. $37 billion | Significant increase YoY |
| Quarterly CAPEX | Approx. $31.9 billion | Data center infrastructure expansion |
| Remaining Performance Obligation (RPO) | Approx. $627 billion | Expected conversion to future revenue |
Valuation
Microsoft's current forward price-to-earnings (Forward P/E) ratio is hovering around 30x, commanding a premium.
This figure significantly exceeds the average for standard growth stocks in the S&P 500, interpreted as reflecting its monopolistic position as an 'AI utility.'
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However, a high multiple becomes the first factor to face valuation pressure when the US 10-year Treasury yield (US10Y) rises.
If the US Dollar Index (DXY) continues its strength, FX loss risks for the cloud business—which has a high proportion of overseas revenue—could also limit the valuation.
With investments in AI hardware infrastructure surging, there is a possibility that rising depreciation costs could pressure operating margins in the future.
The market is paying attention to the speed at which this massive CAPEX can actually translate into highly profitable software margins.
Expert & Institutional Analysis
Major institutions like Morningstar are providing positive assessments of the company's value based on strong cloud growth and backlog. [1]
In particular, solid demand across both traditional and AI workloads is cited as a core investment point from a long-term perspective. [1]
Conversely, some analysts, including those at Melius Research, point out intensifying competition due to the emergence of alternative AI software. [2]
Cautious views are also being raised that core subscription models like Microsoft 365 (M365) could face structural pricing pressure. [2]
Experts believe that while hardware companies in the Philadelphia Semiconductor Index (SOX) benefited from the initial AI cycle, the time has now come for software companies to prove themselves.
In other words, the consensus is that the key lies in the dominance of the so-called 'inference' market, which generates revenue at the application level following the infrastructure investment (CAPEX) cycle.
Risk Factors
The biggest risk is the potential for the market to sell off in disappointment due to delayed AI monetization.
Although paid seats for Copilot have surpassed 20 million, the penetration rate within the entire commercial customer base remains at the 4% level. [1]
Furthermore, from a macro perspective, the fact that the US 10-year Treasury yield may not easily decline due to sticky inflation is also a burden.
If expectations for rate cuts recede, profit-taking and portfolio rebalancing could occur, centering on high-multiple large-cap stocks in the Nasdaq 100.
The intensification of AI antitrust probes by US and European Union (EU) regulatory authorities also acts as a potential risk that cannot be ignored.
If sanctions against cloud lock-in effects and the abuse of AI market dominance materialize, it could create noise for long-term fundamentals.
Investment Perspective Summary
Microsoft's Azure growth rate and RPO metrics prove that the corporate transition to the cloud is a structural trend.
The fact that it is cementing its position as a utility combined with AI services is undoubtedly a positive signal for investors.
However, the high level of the Nasdaq hovering around 26,000 and macro volatility (potential for VIX to rise) demand short-term caution.
Investors need to consider a conditional approach, checking the flow of the US 10-year yield and the company's margin defense capabilities, rather than aggressively chasing the rally.
Investor Checkpoint Q&A
1. What is the current growth rate of MSFT's Azure?
Based on recent earnings, it recorded a year-over-year growth rate of around 39-40%, demonstrating strong cloud demand.
2. What does the $627 billion RPO (backlog) mean?
As a measure of future revenue that customers have committed to pay, it signifies stable earnings visibility and structural demand for AI infrastructure.
3. What impact does massive CAPEX spending have on the stock price?
In the short term, it can raise concerns about increasing depreciation costs and slowing cash flow, but in the long term, it serves as an essential barrier to entry for AI market dominance.
4. What is the relationship between the US 10-year Treasury yield (US10Y) and MSFT's valuation?
Tech stock valuations are sensitive to the discount rate of future cash flows; if Treasury yields rise, downward pressure on the stock price of high-multiple stocks like MSFT increases.
5. How should we approach concerns over delayed AI monetization?
You should monitor the practical enterprise penetration rate of Copilot and the resulting productivity improvement metrics (ROI) at every quarterly earnings report to check the pace of growth.