Key Takeaways
- On Microsoft’s Oct. 28 earnings call, CEO Satya Nadella said growth from a handful of big capacity buyers is “not a business.” Many read it as a shot at CoreWeave and Oracle.
- Microsoft is spreading its AI revenue across many customers, and Nadella said Foundry revenue more than tripled year over year.
- CoreWeave’s total debt reached $29.8 billion at the end of 2025, and Oracle’s free cash flow was negative $23.7 billion in the year ended May 2026, so both are exposed if a big AI customer stumbles.
- Microsoft has its own concentration, with OpenAI at about 11% of last quarter’s revenue, but it pays for its build-out from its own cash.
Microsoft (MSFT) CEO Satya Nadella has some thoughts on the AI landlord business. (He was polite enough not to name names.)
On Microsoft’s Oct. 28 earnings call, a Bernstein analyst asked how much of Azure’s AI demand comes from enterprises. Nadella answered by comparing companies that run AI in their everyday work with “like 4 customers who buy a lot of capacity from you and you can show a few quarters of growth.”
“And that’s not a business as far as I’m concerned.”
Ouch.
No one needed a name to know who he meant. CoreWeave (CRWV) and Oracle (ORCL) have both built their AI growth by renting capacity to a few very large customers, and both have borrowed or spent heavily to do it.
TIKR tracks 57 analysts on Microsoft. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Microsoft, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Microsoft’s Analyst Ratings
Nadella wants the breadth business
Nadella’s alternative is AI that businesses build into work they do every day. He pointed to Rolls-Royce running jet-engine maintenance on Foundry, Microsoft’s platform for building AI agents. He also pointed to Austrian bank RBI, which runs more than 20 business processes end to end.
He’s still happy to sell to big buyers, on his terms: “As long as the pricing is right, we may sell them some. If not, we will be patient about building the breadth business.”
And that breadth is growing fast. In a post on X, Nadella said Foundry revenue more than tripled year over year. Customers building with multiple models grew 5x, and revenue from open-source models rose 10x.
It shows up in Microsoft’s margins too. Its operating margin rose from 42.1% in fiscal 2022 to 46.8% in fiscal 2026, the same year it spent $115.9 billion in cash on capital projects:
CoreWeave and Oracle are carrying the debt
CoreWeave and Oracle are building the opposite way, with a few tenants on the hook for a lot of capacity. CoreWeave’s quarterly report shows three unnamed customers made up 36%, 26% and 10% of its revenue in the June 2026 quarter. Oracle has $638 billion of remaining performance obligations, and S&P Global Ratings estimates OpenAI accounts for roughly half of that.
SaaStr founder Jason Lemkin laid out the risk on Harry Stebbings’s 20VC podcast: “Any bump with Anthropic, OpenAI, or anywhere, CoreWeave and Oracle should be hypersensitive because they have massive debt loads and massive risk.”
CoreWeave’s total debt went from $2 billion at the end of 2023 to $29.8 billion at the end of 2025:
Oracle has gone from producing cash to burning it. Its free cash flow fell from $11.8 billion in the year ended May 2024 to negative $23.7 billion in the year ended May 2026:
Renting out capacity may only get harder. Nadella said last week that most AI will be “commodity token usage,” with “lots of price competition.” That’s a tough market to rent into with $29.8 billion of debt.
Microsoft is one of the big buyers
Of course, Microsoft carries some of the same risk. It booked $10.0 billion of revenue from its commercial arrangements with OpenAI last quarter, about 11% of its $92.3 billion total. OpenAI also made up about 45% of Microsoft’s commercial backlog at the end of 2025.
Microsoft is also a major CoreWeave customer. Last quarter’s capex came in at $45.2 billion, short of the more than $50 billion it guided, as “some third-party capacity deliveries we expected in Q1 were delayed,” CFO Amy Hood said. CoreWeave and other neoclouds fell on the news.
So Microsoft is itself one of those few big buyers.
What sets Microsoft apart is who holds the debt. Microsoft says nearly 90% of its Microsoft Cloud revenue in fiscal 2026 came from customers other than frontier model companies. Its backlog outside OpenAI grew 25% in the year to June. And it generated $182.9 billion of operating cash flow in fiscal 2026, enough to cover its capex with $67.0 billion left over.
If OpenAI stumbles, Microsoft loses a big customer and keeps a business that pays its own way, while CoreWeave and Oracle still owe their lenders.
Nadella has a point
My take: Nadella is right. Given the choice, I’d rather own the company with thousands of AI customers and cash to spare than the ones that borrowed to serve a few labs.
Of course, Hood also said “Customer demand continues to exceed available supply.” While that holds, CoreWeave and Oracle can fill every rack they build. CoreWeave’s next quarterly report will show whether its top three customers are shrinking as a share of revenue. (My prediction? They aren’t.)
So what is Microsoft stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Microsoft could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
