How did Microsoft's cloud revenue perform in the recent quarter?

Microsoft's cloud revenue narrowly surpassed expectations in the fiscal second quarter.

What is Microsoft's strategy regarding AI investment?

Microsoft is significantly increasing its capital spending on artificial intelligence, particularly on central and graphics processing units.

What is the status of Microsoft's cloud backlog?

Microsoft's contracted cloud backlog more than doubled, significantly influenced by a commitment from OpenAI.

Home / Business and Economy / Microsoft's AI Bet: Cloud Growth Slows, Spending Soars

Microsoft's AI Bet: Cloud Growth Slows, Spending Soars

29 Jan

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Summary

Cloud revenue narrowly beat estimates, but AI spending escalated significantly.
Backlog in cloud business doubled, heavily influenced by OpenAI's commitment.
Capital expenditure surged 66% year-on-year to $37.5 billion for AI infrastructure.

Microsoft's AI Bet: Cloud Growth Slows, Spending Soars

Microsoft's fiscal second-quarter results revealed that its cloud-computing revenue just exceeded expectations. The company has significantly ramped up its investments in artificial intelligence, a move that has raised investor concerns about profitability.

While the contracted backlog for its cloud business saw a substantial increase, doubling to $625 billion, a significant portion is linked to OpenAI. This highlights Microsoft's reliance on the startup, which has pledged massive AI expenditures without clear funding details.

Revenue growth in Microsoft's Azure cloud unit reached 39%, narrowly surpassing the consensus estimate. However, this growth occurs amidst increasing competition from rivals like Google and Anthropic.