Microsoft: Not Immune To The Risk Of Overbuilding (NASDAQ:MSFT)

David Desjardins 1.86K Follower s Follow 5 Share Save Play ( 14min ) Comments Summary After reporting capital expenditures of $34.9 billion in Q1-26, well in excess of the previous $30 billion guidance, Microsoft has one of the largest capital programs in the AI industry. With a 27% interest in OpenAI's for-profit entity and the $250 billion deal announced in October 2025, Microsoft has one of the greatest exposures to OpenAI. Keeping in mind that OpenAI also announced a $300 billion deal with Oracle in September 2025, I wonder how a young and unprofitable start-up can honour deals of that size. Trading at a free cash flow yield below 3%, Microsoft's valuation takes into account its widely profitable and rapidly growing cloud business on top of its unparalleled access to capital. My 'Sell' rating reflects my personal views about where we are in the AI infrastructure cycle. With hundreds of billions flowing into the industry, the risk of overbuilding is real. lcva2/iStock Editorial via Getty Images Summary With one of the largest capital budgets in the AI industry, Microsoft ( MSFT ) is at the forefront of the historic AI infrastructure boom currently taking place. In line with other hyperscalers, Microsoft is highly This article was written by David Desjardins 1.86K Follower s Follow For almost a decade, I held research analyst positions in various investment firms, mostly in Toronto. I started in sell-side research with a Canadian bank, then moved to a hedge fund, followed by a family office and then finished my career in wealth management. I was 20 on my first day on Bay Street. I will forever remember. I had worked so hard to get there, from a small French-speaking town in Québec. Getting my CFA and CAIA designations by 25 was another important milestone. I was a young man with a dream, wanting to make it big. However, life was about to teach me a painful lesson. Before conquering the world, a man must first conquer himself by going into the depths of his own abyss. Only then may he shed his naivety and become a man truly able to love.For the last three years, I have been living in a yurt in the boreal forest, approximately 100 kilometres away from the closest paved road or grocery store. In a forest full of birds, just beside a lake full of fish. For water, I go to the creek. For heat, there is plenty of white birch and quaking aspen around. If I need anything in town, I have plenty of money for my needs. I am now 30 and as free as the birds in the skies, so what else can I ask for? In all humility, and in all gratitude, I say thank you to this grandiose symphony we call life. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this...

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