Microsoft AI spending jumps, cloud growth disappoints
Microsoft’s massive investment in artificial intelligence is raising fresh concerns on Wall Street after the company reported record capital spending alongside slower-than-expected cloud growth, triggering a sharp drop in its share price in after-hours trading.
The tech giant revealed it spent an unprecedented $37.5 billion on capital expenditures in the October–December quarter, largely driven by investments in AI infrastructure and computing chips. Since the start of its 2024 fiscal year, Microsoft’s total AI-related spending has surpassed $200 billion, underscoring its aggressive push to lead the global AI race, News.Az reports, citing Reuters.
Despite the heavy outlay, growth in Microsoft’s Azure cloud business came in at 39% for the quarter — only narrowly exceeding market expectations. Investors had hoped for stronger returns from Microsoft’s partnership with OpenAI and its early advantage in AI-powered cloud services. Instead, slower cloud momentum raised doubts about how quickly AI investments will translate into higher profits.
Microsoft shares fell more than 6% in after-hours trading following the earnings release, reflecting growing investor unease over rising costs and intensifying competition. New AI models such as Google’s Gemini and Anthropic’s Claude are gaining traction, increasing pressure on Microsoft’s dominance in enterprise AI solutions.
CEO Satya Nadella sought to reassure analysts, emphasizing that AI adoption remains in its early stages. He disclosed that Microsoft’s M365 Copilot AI assistant has reached 15 million annual users, marking the company’s first release of core usage data for its flagship AI business tool.
Looking ahead, Microsoft forecast Azure revenue growth of 37–38% for the current quarter, roughly in line with expectations. However, the company warned that rising memory chip prices could squeeze cloud margins in the coming months.
As Big Tech collectively plans to spend more than $500 billion on AI this year, investors are increasingly focused on whether Microsoft’s record-breaking AI investments will deliver sustainable long-term returns.
By Aysel Mammadzada
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