Microsoft and Tesla Enter September With Momentum but Which Is Better?
Azure is printing cash while Tesla burns it chasing a future that has yet to show up in margins. Before you buy the August momentum in either name, the numbers reveal a stark split in what each company is actually…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Microsoft (NASDAQ: MSFT | MSFT Price Prediction) and Tesla (NASDAQ: TSLA) enter September with momentum, but their earnings tell opposite stories. Microsoft closed a record fiscal year powered by Azure and Copilot. Tesla posted record deliveries while operating income collapsed under an AI capex wave.
Azure Prints Cash. Tesla Burns It to Build the Future.
Microsoft delivered $90 billion in Q4 revenue, up 18%, with Azure crossing $100 billion annually and Microsoft 365 Copilot passing 30 million paid seats. Satya Nadella called it “a very strong close to what was a record fiscal year for us” and said “demand continues to exceed available supply”. Commercial RPO jumped to $678 billion, a backlog that pre-sells future quarters.
Tesla was messier. Revenue hit $28.24B on record Q2 deliveries of 480,126 vehicles, yet EPS of $0.33 missed the $0.54 estimate. Operating margin cratered to 1.4%. CFO Vaibhav Taneja said “we exited Q2 with our largest order backlog since 2023”, but free cash flow flipped to negative $1.09B. FSD attach hit 55% of North American deliveries, a real hook, just not yet an earnings driver.
| Business Driver | Microsoft | Tesla |
| Growth engine | Azure, Copilot, Foundry | Model Y, FSD, Robotaxi |
| Margin trend | Operating margin near 45% | Auto GM ex-credits fell to 16.3% |
| Cash story | FCF $19.6B in the quarter | FCF negative, capex +142% YoY |
Monetizing AI Today vs. Financing AI for Tomorrow
Microsoft spends to feed a paying pipeline. Azure is guided to grow around 45% in constant currency in Q1 FY27, and Amy Hood noted “when we can make efficiency gains, they are quickly monetized in quarter”. That capex wave also lifts the power, cooling, and networking suppliers behind the data centers (we rounded up seven of them in a free report here). Tesla spends against a promise. Elon Musk framed it plainly: “this is a massive CapEx year, but I’m confident that all the things that we’re investing in will yield incredible returns”. Robotaxi covered 380,000 miles with “zero notable incidents”, impressive but early.
Valuation reflects the split. MSFT trades near 28 times earnings with a $569.45 analyst target. TSLA sits near 332 times earnings with a $390.09 target, only slightly above spot.
What Decides the Next Leg
For Microsoft, watch Azure capacity. Nadella conceded capacity constraints and guided FY27 capex to roughly $175 billion. If GPU lead times improve, that RPO converts smoothly. For Tesla, the near-term test is Cybercab ramp, Optimus milestones, and whether auto gross margin stabilizes now that regulatory credits fell to $146M. Keep an eye on the stock as the 0.73 put/call ratio hints at a cautious options crowd.
Why I Lean Microsoft Into September
Microsoft fits the setup I want right now. The 9.37% one-month gain came with real earnings behind it, not just narrative. Tesla’s 18.23% August rip is exciting, but it sits on a -18.18% YTD hole and margins I do not yet trust. If you want durable cash flow, Copilot seat growth, and a $678 billion backlog, MSFT is the cleaner play. If you are underwriting Robotaxi and Optimus with a decade-long horizon and can stomach volatility, TSLA has the bigger asymmetric payoff. Better risk-adjusted setup goes to Microsoft.
Contact [email protected] for any questions or corrections.
Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
