Microsoft to spend $30 billion this quarter as AI investments pay off

MICROSOFT FORECAST on Wednesday a record $30 billion in capital spending for the current fiscal first quarter, after booming sales in its Azure cloud computing business showcased the growing returns on its massive bets on artificial intelligence (AI).

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Shares of the software company rose 9% in extended trading after it said Azure sales surpassed $75 billion on an annual basis, the first time it has disclosed that figure, beating expectations for $74.62 billion.

Microsoft's higher-than-expected capital expenditure forecast — its largest ever for a single quarter — put it on track to potentially outspend its rivals over the next year. It came after Google said it would spend more on data centers to meet demand for AI services, and Meta projected higher sales with only modest increases in spending. The trio of results could help resolve investor questions about whether Big Tech is benefiting from its massive data center buildout, with capital spending to reach $330 billion this year.

Microsoft and Meta's results helped fuel a $500-billion gain in AI stocks.

"I feel very good that the spend that we're making is correlated to basically contracted, on-the-books business that we need to deliver," Microsoft Chief Financial Officer Amy Hood said on a conference call with investors.

Microsoft's cloud business still trails market leader Amazon Web Services, which had a head start in cloud computing and brought in $107.56 billion in its most recent fiscal year. But investors said Microsoft's new revenue figure indicates its investments are translating to increased sales.