In Microsoft’s fiscal Q2, commercial remaining performance obligations hit $625 billion, driven by demand for AI-capable cloud computing. OpenAI contributes 45% to the backlog. However, caution is advised as RPOs represent contracted work, not guaranteed revenue, and customer concentration risk is high. Cloud revenue growth has decelerated, and massive spending could impact margins.

Investors should focus on Microsoft’s financial results rather than speculating on its backlog. Despite the backlog growth, there are uncertainties in converting it to revenue swiftly. Microsoft’s revenue rose 17% YoY in fiscal Q2, with non-GAAP EPS up 24% YoY, making the stock attractive at its valuation. However, the company’s high-risk profile and soaring capital expenditures should be considered.

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Read more at Nasdaq: Is It Time to Buy Microsoft Stock as Its Backlog Soars?