$Microsoft(MSFT.US) Many investors have recently started to worry about Microsoft.

The reason is simple: capital expenditures are too high, data centers are too expensive, and the return on AI investment hasn't fully materialized yet.

But if you carefully study Microsoft's financial reports, you'll find a very interesting fact: the market is worried about Microsoft spending too much money, but it's overlooking just how strong Microsoft's ability to generate profits really is.

Microsoft is not, in essence, an AI company; it's a cash flow machine with AI.

In the past quarter, Microsoft's revenue reached $82.9 billion, a year-over-year increase of 18%; operating profit reached $38.4 billion, a year-over-year increase of 20%; Azure still maintained a growth rate close to 40%. Many people get scared when they see Microsoft's plan to invest hundreds of billions of dollars in AI over a year, but the issue is that Microsoft isn't funding its AI efforts through financing; it's using its own profits to do so.

Microsoft's biggest advantage lies in the fact that it already possesses the world's most mature software business empire. Office 365, Windows, Azure, GitHub, LinkedIn, Dynamics, Copilot—these businesses cover almost every aspect of enterprise digitalization. And AI is becoming a new growth engine for these businesses.

Many investors worry whether capital expenditures will crush free cash flow. The answer is that it will compress free cash flow in the short term, but it won't shake Microsoft's foundation. Microsoft's problem has never been an inability to make money; it's that it makes too much money and reinvests a large amount of cash into the next round of AI infrastructure construction.

In fact, the most successful tech companies in history have often gone through similar phases. Amazon was like this during the cloud computing era, Meta was like this during its short video transformation period, and Microsoft is doing the same thing during this AI infrastructure construction cycle. The market focuses on next quarter's profit margins, while long-term investors should pay more attention to the competitive advantages over the next five years.

I believe Microsoft's greatest value is not in holding equity in OpenAI, but in the fact that it already has the world's most complete enterprise software ecosystem. When companies start deploying AI, what's easiest to procure is often not brand-new software, but the AI features within Microsoft's existing products. This natural distribution capability is a moat that the vast majority of AI companies do not possess.

So I'm increasingly convinced that Microsoft's recent adjustment is more like a market emotional reaction to capital expenditures, rather than a deterioration in fundamentals. If Azure maintains high growth in the coming quarters, Copilot continues to penetrate enterprise customers, and AI revenue gradually covers capital expenditures, then the problems the market is worried about today are likely to become the driving force for pushing the stock price to new highs in the future.

For long-term investors, the most comfortable entry point is often not when the market is most optimistic, but when the market starts to question a great company. Microsoft might be in just such a phase.