Microsoft gains as Anthropic discloses $44.9B commitment

Microsoft ↘ 3.58% shares rose about 1% to 2% in trading on Tuesday, November 3. Investors were weighing a newly disclosed Anthropic commitment worth at least $44.9 billion alongside the company's heavy spending on artificial intelligence infrastructure. The gain partly reversed a decline of nearly 3% in the previous session, according to 24/7 Wall St. and Yahoo Finance.247wallst.com+1

The move came as other AI cloud stocks rallied. Oracle ↘ 6.93% jumped after a $20 billion stock and bond sale that investors saw as clearing a funding overhang, and CoreWeave ↘ 9.83% gained even more.247wallst.com

The Anthropic disclosure

Anthropic's amended IPO prospectus, filed with the SEC on November 2, lists about $895.4 billion in purchase commitments and leases. Nearly all of it is for compute and infrastructure. Microsoft's share is at least $44.9 billion through June 2033. Google's is $121.3 billion and Amazon's Amazon.com, Inc. ↘ 2.19% is $110 billion. That is up from the $31.4 billion Microsoft commitment in Anthropic's confidential prospectus, which Reuters reported in September.cnbc.com+2

The filing also carried a warning. Anthropic said that some compute providers "depend on third-party financing or credit support," and that capacity "may be delayed, repriced, reduced, or not delivered" if that financing becomes unavailable or more costly. The commitment is small next to Microsoft's $677 billion in commercial remaining performance obligations.247wallst.com+1

Cloud growth and capex

For its fiscal first quarter ended September 30, Microsoft reported revenue of $92.3 billion, up 19%, and net income of $36.6 billion. Chief Financial Officer Amy Hood said Microsoft Cloud revenue was $63.9 billion, up 30%, and Azure grew 48%. Capital expenditures came to $45.2 billion because some third-party capacity deliveries were delayed.microsoft.com+1

"In Q2, we expect CapEx spend will be over $50 billion," Hood said. She put calendar-year spending at about $170 billion and guided second-quarter revenue to between $96 billion and $97.1 billion. Chief Executive Satya Nadella said accelerating demand led Microsoft to add 24 new data centers across five continents during the quarter.microsoft.com

Returns remain the test

That spending is weighing on cash generation. Free cash flow fell 27% to $18.63 billion in the quarter. Morningstar ↗ 1.20% titled its review of the results "Azure Accelerates, but Investment Returns Remain the Test". Hood said, "Customer demand continues to exceed available supply".morningstar.com+2