What is Microsoft?

Microsoft plans to merge all Copilot experiences, including coding tools, into a single super app within the current quarter.

“This quarter we are bringing these Copilot experiences together, including code in one super app.”

The four largest AI capex spenders (Google, Meta, Microsoft, Amazon) are at 90% capex-to-cash-flow, above the prior peaks of roughly 80% seen in telecom (1999-2000) and energy (2014-2015).

“We're actually at if you look at the big spenders we're at 90% right now capex to cash flow.”

Microsoft has royalty-free access to OpenAI frontier model IP for seven more years from the time of recording.

“Having a royaltyfree let's even forgetting all the knowhow and the knowledge side of it but having royalty-free access all the way till seven more years gives us a lot of flexibility business model wise.”

Knapp explains why AI capex growth is likely peaking by benchmarking current capex-to-cash-flow ratios against the telecom and energy sector peaks that preceded major investment busts.

“One is capital spending is a percent of cash flow or IBIDA interest before interest, taxes, depreciation, and that got to 80% in the telecommunications sector in 99200 and that was the peak. the same thing happened to the energy sector in 2014 2015 during the shale investment boom >> that was kind of peak. Now these companies underlying businesses are growing much more strongly much more resilient companies but we're actually at if you look at the big spenders we're at 90% right now capex to cash flow.”

Microsoft, Meta, and Google are each on track to spend over 50% of their revenue on capex in 2026.

“Microsoft, Meta and Google are all on in line to spend over 50% of revenue on capex this year.”

Satya Nadella on OpenAI consistently exceeding its business plans presented to Microsoft.

“There is not been a single business plan that I've seen from OpenAI that they have put in and not beaten it.”

AI capital spending is larger than publicly reported because major hyperscalers carry massive off-balance-sheet leases for Nvidia chips and data centers that have not yet begun.

“Google and Meta and Microsoft and Oracle and Amazon and Nvidia have these massive offbalance sheet leases that have not started yet.”

A meaningful share of reported earnings at Microsoft, Google, and Amazon currently derives from marking up the value of private stakes in Anthropic, OpenAI, and SpaceX rather than from operating performance.

“A lot of the money that Microsoft and Google and Amazon have are basically marking up the value of their stakes in anthropic, open AAI and SpaceX and other companies.”

Altria has outperformed Meta, Microsoft, and Amazon over the last five years despite US cigarette volumes declining 7 to 8% annually.

“Cigarette volume has been declining at 78% in US and guess for last 5 years Altria has outperformed meta I think now Microsoft and Amazon last 5 years.”

Owner replaced Excel with Claude as its primary financial modeling environment, enabling real-time metric querying rather than static spreadsheets.

“About a year and a half ago started operating in Claude instead of Excel as our primary financial artifact.”