- Bond Sale: Microsoft seeks at least $25 billion in US bonds as its AI infrastructure investment grows.
- Flexible Uses: A preliminary filing permits investment, acquisitions, share buybacks and debt repayment, giving Microsoft several ways to use the money.
- Cash Generation: Its September 2026 quarter produced $58 billion in operating cash and $18.6 billion after cash investment in property and equipment.
Microsoft is seeking at least $25 billion from US bond investors, Bloomberg reported on October 29, as it expands the data centers and equipment behind its cloud and artificial-intelligence services.
The final amount remains subject to investor demand. The planned offering would be Microsoft’s first US investment-grade bond sale since 2017, when it raised $17 billion. Investment-grade bonds are corporate debt with higher credit ratings.
Finance chief Amy Hood had outlined the rationale a day earlier. On Microsoft’s October 28 earnings call, she said additional funding would supplement cash from the business and preserve financial flexibility when financing terms were attractive. She pointed to leases already in use and access to debt markets as options.
Corporate Borrowing With Flexible Uses
Microsoft’s October 29 preliminary prospectus describes ten series of notes: two with floating interest rates that follow a market benchmark and eight with fixed rates. Bloomberg reported maturities ranging from two to 40 years. The preliminary document leaves the amounts, interest rates and precise maturity dates open.
Investors would receive interest and repayment claims against Microsoft, without specific assets pledged as collateral. J.P. Morgan, UBS Investment Bank and Wells Fargo Securities are arranging the offering.
The preliminary filing’s permitted uses include working capital, capital expenditure, share repurchases, acquisitions and repayment of existing debt. Microsoft has used bonds for a specific acquisition before: its August 2016 sale raised $19.75 billion to help fund LinkedIn. The new document leaves the proceeds available across a broader range of corporate needs.
More Operating Cash, Less Left After Investment
Microsoft’s financial statements for the September 2026 quarter show why strong cash generation can coexist with an appetite for financing. Operating cash increased from a year earlier, but cash purchases of property and equipment more than doubled. That left about $7 billion less after those investments, despite the larger inflow from operations.
Microsoft Cash Flow for the Three Months Ended September 30 (US$ Billions)
| Measure | 2025 | 2026 |
|---|---|---|
| Operating cash flow | 45.057 | 58.000 |
| Cash additions to property and equipment | 19.394 | 39.367 |
| Free cash flow | 25.663 | 18.633 |
Free cash flow is calculated as operating cash flow minus cash additions to property and equipment.
The $18.6 billion remaining after cash investment gives Microsoft money for other corporate uses. It also held $64.5 billion in cash, cash equivalents and short-term investments at September 30, against $35.5 billion in outstanding debt.
Azure, Microsoft’s cloud-computing service, increased revenue 48% to $33.2 billion in the September quarter.
A Different Cash Position From Alphabet
Microsoft’s cash purchases of property and equipment consumed 68% of operating cash flow in the September quarter, compared with 121.4% at Google parent Alphabet.
Alphabet’s cash investment exceeded the cash its operations generated, leaving a difference to cover through reserves or borrowing. Microsoft retained cash after those purchases. Melissa Otto, head of research at S&P Global Visible Alpha, characterized Microsoft’s growth as disciplined, contrasting it with Alphabet’s cash consumption and weaker-than-expected results in its core Google Search business.
Check Capital investment officer Jeremy Saltzberg, whose firm owns Alphabet shares, argued that Alphabet needed large outlays to remain competitive as AI developers OpenAI and Anthropic appeared to pull ahead in the model race.
For Microsoft, Hood said she expected the company to remain free-cash-flow positive in fiscal 2027.
