Analyst Keith Weiss highlights potential for higher cloud revenue as Microsoft expands AI infrastructure ahead of demand.
Microsoft’s capital expenditures on AI infrastructure may yield higher cloud revenue than markets currently expect, according to a Morgan Stanley analysis. The firm’s framework estimates Microsoft’s cloud ecosystem generates $20 million to $30 million in annualized revenue per megawatt of datacenter capacity, with expectations for this figure to decline to the high teens by fiscal 2028.
The analysis suggests Microsoft is building capacity ahead of demand, positioning it to capitalize on future monetization. While revenue per megawatt is projected to decrease, the trend reflects proactive investment rather than weakening monetization opportunities.
Morgan Stanley’s findings indicate potential for upward revisions in cloud revenue forecasts as AI adoption accelerates. The report underscores confidence in Microsoft’s long-term growth trajectory amid its AI-driven expansion.