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Microsoft Is Turning The Fed’s Rate Cut Into A 2026 AI Spending Supercycle!

The big story heading into 2026 is simple. Microsoft looks like the early favorite to be the market’s biggest AI winner. Every new budget cycle pushes more workloads, more data, and more everyday work into Azure and Copilot. Now add a Fed rate cut on top of that. According to KeyBanc, IT budgets are set to expand 3.7% next year, with AI’s share rising from 3.2% to 4.7%. That shift, combined with Microsoft’s dominant position in cloud infrastructure, AI software, and productivity tools like Copilot, places it squarely at the center of this renewed corporate investment cycle. With the Fed easing financial conditions, enterprise demand for efficiency-enhancing technology could accelerate, providing Microsoft with powerful monetary and structural tailwinds. Even though Microsoft barely borrows and sits on a mountain of cash, cheaper money still matters. It changes the behavior of everyone around it.