• Microsoft (MSFT) is reportedly targeting at least $25 billion in a US bond sale, a major debt raise to support its cloud and AI expansion.
  • The move follows strong quarterly results, with revenue up 19% and Azure growth at 48%, but capital expenditures more than doubled to $45.2 billion.
  • The reported offering underscores a broader trend of tech giants tapping credit markets to fund massive AI infrastructure spending.

A Capital-Hungry Cloud Giant

Microsoft is looking to raise at least $25 billion from a US bond sale, according to people familiar with the matter, as the software giant ramps up financing for its increasingly capital-intensive cloud and artificial intelligence businesses. The reported fundraising target, if completed, would mark one of the largest debt offerings in the company’s history and signal that even the most cash-generative technology firms are turning to external funding to keep pace with AI infrastructure demands.

The move comes just a day after Microsoft reported fiscal first-quarter results that beat analyst expectations, with revenue climbing 19% year-over-year to $92.3 billion and Azure revenue surging 48%. Net income on a GAAP basis rose 32% to $36.6 billion, or $4.92 per diluted share, though adjusted net income, which excludes gains from OpenAI investments, grew 18% to $36.4 billion, or $4.89 per share.

Capex Surge Outpaces Cash Generation

Despite those robust numbers, Microsoft’s capital expenditures more than doubled to $45.2 billion from $34.9 billion a year earlier, reflecting the company’s aggressive buildout of data centers and AI infrastructure. Free cash flow remained positive at $18.6 billion, roughly $10 billion above analysts’ expectations, but the gap between operating cash flow and infrastructure spending is narrowing.

CFO Amy Hood said on the earnings call that the company would access additional funding when attractive to complement internally generated cash and preserve financial flexibility. The reported bond sale aligns with that strategy, though final pricing, maturities, investor demand and the stated use of proceeds remain unverified.

Microsoft’s latest quarter also saw a substantial backlog of commercial remaining performance obligations—contracted revenue not yet recognized—totaling $677 billion, a figure that underscores strong demand but also the pressure to deliver capacity on schedule. Some capital spending fell below plan in the quarter because third-party capacity deliveries were delayed, not because Microsoft had scaled back its ambitions.

A Broader Shift in Tech Financing

The reported bond sale would be the latest example of large technology companies turning to debt markets to fund AI infrastructure. In July, Amazon (AMZN) announced a $25 billion US-dollar bond sale to support its own AI investments, with final demand settling at approximately $41 billion after pricing tightened. Alphabet (GOOGL) recently reported negative quarterly free cash flow of $9.07 billion as capital spending surged, while Oracle (ORCL) said it expected capital spending to peak in the current fiscal year and the next while pledging no more than $20 billion in additional AI financing through fiscal 2030.

Industry-wide, Reuters (TRI) estimates that large technology companies will spend more than $700 billion in 2026 on data centers, hardware and energy. That scale is prompting investors to scrutinize credit risk more closely. According to Reuters, citing Truist (TFC), Microsoft’s five-year credit-default-swap spreads remained the tightest among the largest technology companies, even as perceived risk increased across parts of the AI sector—a signal that Microsoft retains a premium credit profile.

Microsoft has precedent for large debt offerings. In August 2016, the company raised $19.75 billion in a bond sale tied to its acquisition of LinkedIn. A completed $25 billion transaction would exceed that deal, though it is not yet clear whether it would be the company’s largest-ever offering.

Workforce and Energy Pressures Linger

The financing push comes amid broader restructuring. On October 26, Microsoft announced voluntary buyout offers covering approximately 60,000 eligible employees across Canada, India, the UK and the US—an offer population, not confirmed departures. The company described the move as adapting its workforce to changing needs, though it creates uncertainty for employees even as profits rise.

Meanwhile, the AI infrastructure boom is drawing political scrutiny over who pays for electricity grid upgrades. Policymakers in the US are considering measures to prevent households from subsidizing data-center power costs, and Spain is revising proposed data-center energy requirements after industry opposition. Microsoft has said it wants to pay its own way but has preserved its legal right to challenge new Virginia transmission-cost rules.

Microsoft did not immediately respond to a request for comment on the reported bond sale. The company’s shares rose more than 5% in after-hours trading following the earnings release, though that reaction was tied to results and outlook, not the bond headline.

Clarification: An earlier version of this article stated that the bond sale had been confirmed. In fact, the offering has been reported but not independently verified by Roic AI. The amount should be treated as a reported fundraising target, not a completed transaction.