INSIDE NADELLA'S AI RESET AT MICROSOFT

Earlier this month, Microsoft promoted Judson Althoff, its longtime sales boss, to chief executive of its commercial business, consolidating sales, marketing and operations across its products. The move was designed gence.

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Nadella said the reorganization was essential to grow its existing business and build a new frontier simultaneously, amid a "tectonic AI platform shift". Microsoft's initial momentum in AI came from its data centre capacity and its partnership with OpenAl. Now, with competition intensifying and external pressure mounting, Microsoft is diversifying beyond OpenAI, recalibrating its infrastructure and reshaping its core products.

INFRASTRUCTURE PIVOT

MICROSOFT'S SHIFT away from OpenAI is perhaps most visible in its approach to infrastructure. Microsoft declined to be a part of OpenAI's $500-billion Stargate project, preferring more diversified, globally distributed facilities.

It is betting big on its own AI infrastructure. Its capex is projected to hit $120 billion in FY26, up from FY25's $88.2 billion (Microsoft's financial year runs from 1 July to 30 June). This capex will fund projects such as Wisconsin's Fairwater data centre with Nvidia GB200 GPUs and a $15 billion push into UK infrastructure.

Microsoft is also betting on neoclouds (specialised cloud providers offering high-performance, AIoptimised infrastructure) to address capacity shortages.

It has pledged over $33 billion to neocloud firms such as Nebius ($19.4 billion) and Core Weave. This gives it faster access to advanced AI computing power. Shifting internal workloads to neoclouds frees up Microsoft's own data centres to serve lucrative cloud customers.

GAMING STRUGGLES