Microsoft plans to take a position greater than $30 billion in capital expenditures within the upcoming quarter — a brand new excessive — because it races to develop its cloud and AI capability.
Amy Hood, the corporate’s chief monetary officer, disclosed the determine on Microsoft’s earnings name after the corporate reported stronger-than-expected outcomes for its fiscal fourth quarter, together with $76.4 billion in income, up 18% from a yr earlier, and earnings of $3.65 per share, a 24% improve.
The corporate reported $24.2 billion in capital spending for the just lately accomplished quarter. Greater than half of that was directed towards long-lived property anticipated to assist monetization for 15 years or extra, Hood mentioned, whereas the rest targeted on servers — each CPUs and GPUs — to assist rising AI workloads.
Hood mentioned the corporate is making the investments primarily based on “continued sturdy demand indicators” for AI from Microsoft’s prospects.
Maintaining with Amazon and Google
Microsoft continues present vital computing capability to OpenAI for coaching and working the fashions that energy OpenAI and different functions. The Redmond firm is racing towards cloud rivals Amazon and Google in constructing capability to coach and run AI fashions for a variety of shopper and enterprise functions.
- Google’s capital spending for the second quarter of 2025 was $22.4 billion, based on numbers launched as a part of its earnings report final week.
- Amazon might see as a lot as $111 billion in capital expenditures this yr, with the bulk going towards expertise and infrastructure, based on Morgan Stanley estimates.
AI boosts cloud demand
In a brand new disclosure, Microsoft mentioned income from its Azure cloud platform surpassed $75 billion for the fiscal yr, up 34% from the prior yr — pushed not solely by AI demand however by “progress throughout all workloads,” based on an announcement from Microsoft CEO Satya Nadella within the firm’s earnings launch.
Later, talking on Microsoft’s earnings name, Nadella mentioned the corporate’s Copilot functions have surpassed 100 million month-to-month energetic customers throughout business and shopper choices.
By comparability, Google final week mentioned its Gemini app now has greater than 450 million month-to-month energetic customers, which displays the search big’s bigger attain on Chrome and Android units.
General, Microsoft now has greater than 800 million month-to-month energetic customers of AI-powered options throughout its merchandise, Nadella mentioned on the decision.
Capital spending and job cuts
The record-setting capital investments coincide with vital workforce reductions on the firm, totaling greater than 15,000 cuts since Could. In a current press convention and interview with GeekWire, Microsoft President Brad Smith mentioned that inside AI-driven effectivity beneficial properties have been “not a predominant issue” within the firm’s layoffs.
Nevertheless, he famous that rising capital expenditures have created strain to scale back working prices, which consist largely of worker headcount.
In a memo to staff final week, Nadella acknowledged the “uncertainty and seeming incongruence” of thriving financially whereas present process main layoffs.
“That is the enigma of success in an trade that has no franchise worth,” he wrote. “Progress isn’t linear. It’s dynamic, typically dissonant, and at all times demanding. However it’s additionally a brand new alternative for us to form, lead by means of, and have larger impression than ever earlier than.”
