Microsoft AI Spending Boosts Cloud Growth but Worries Investors

Spread the love

Microsoft recently released its quarterly earnings report The company has invested heavily in AI, exceeding $35 billion Investors are concerned about this spending However, the cloud business is strong Azure sales increased by 40%, and this report is for 2025 We will discuss this topic in detail Microsoft is one of the world’s largest tech companies It is a leader in AI The partnership with OpenAI is significant The company is focusing on cloud services But increased spending has caused the stock to fall We will look at all the details This article is in Hindi We will use simple words We will keep sentences short We will use the active voice more often.

Microsoft’s Financial Report

Microsoft reported its earnings for July to September 2025 Total revenue was $77.7 billion, which is 18% more than last year Analysts had expected $75.33 billion The company exceeded this, and earnings per share were $3.72 The expectation was $3.67, and the company’s profit was $27.7 billion This increased by 12% The main reason is the cloud business AI investment helped But spending reached record levels Capital expenditure was $34.9 billion This is 74% more than last year The company built data centers and bought chips for AI Demand is high Supply is low This problem will continue until June 2026 CFO Amy Hood said that spending will increase.

Why the Spending on AI?

Microsoft is investing in AI. has a partnership with OpenAI The company received a 27% stake, but it is worth $135 billion OpenAI has promised to buy more than $1 trillion worth of computing power AI services like Microsoft 365 Copilot are popular The company is building its own models and has also partnered with companies like Anthropic. It is reducing its dependence on OpenAI Some contracts were awarded to Oracle, and there’s an AI boom Tech companies are competing Microsoft is challenging Amazon Azure is the second-largest cloud provider, and the success of its cloud business led to a 40% increase in Azure’s revenue Analysts had expected 38.4%. It could have been even higher due to capacity constraints A 37% increase is expected in the next quarter

This is higher than 36.4%, and the demand for cloud services has increased to run AI applications The company is expanding its data centers. It will increase AI capacity by 80% this year. It will double its data centers in the next two years, benefiting from the OpenAI partnership and the exclusive models But OpenAI’s losses impacted Microsoft by $3.1 billion.

Regarding investor concerns:

Shareholders are worried Shares fell 4% after the report The company’s market value is $4 trillion It’s the second largest after Nvidia. Shares have risen 30% this year But there are fears about spending, and analyst Bob Lang said that capex is concerning There is little evidence of increased productivity from AI Tech valuations are high. It’s reminiscent of the 1990s dot-com bubble, and other companies are also increasing spending Meta gave guidance of $70-72 billion Google will spend $91-93 billion All will increase further in 2026 Despite this

investors are wondering if there is an AI bubble But revenue is growing Investments will pay off compared to other tech companies, but Meta, Google, and Microsoft are betting on AI They are building data centers. They are filling them with servers Nvidia’s CEO mentioned $500 billion in orders Meta’s revenue was $51.2 billion, higher than expected But expenses increased Google increased capex Amazon is also included A total investment of $320 billion.

Future Plans

Microsoft provided guidance of $79.5-80.6 billion in revenue for the next quarter. This represents a 14-16% increase. The OpenAI investment is no longer included in the guidance because OpenAI has become a for-profit company, and Microsoft will increase its capital expenditures (capex). The focus is on GPUs and CPUs. This will address capacity issues and double AI capabilities, which investors will be watching closely. Tariffs and the economic outlook could have an impact. Customers may reduce spending, and the impact of AI on humans is also a concern, as AI is affecting the human brain. Brain-computer interfaces are being developed, and Microsoft is creating AI tools that can read thoughts. However, this is still in the early stages, but there are AI detection tools that identify AI-generated content. Use active voice and keep sentences short to create a more human-like writing style. This article follows that approach.

The Broad Impact of AI Investment

AI is transforming the economy. Jobs will be affected, but new opportunities will emerge. Microsoft is running training programs, teaching employees about AI, and also addressing the environmental impact. Data centers consume a lot of electricity. The company is focusing on sustainable energy, but AI is also impacting the healthcare sector. Microsoft has a Cloud for Healthcare platform. AI assists in diagnosis and also in education. Students use AI tools, but there are concerns about cheating. Analyst Gil Luria stated that the demand is real, but some aspects resemble a bubble. Companies are borrowing money, and there is circular spending. AI can augment human thinking; tools like Copilot help with this. However, there are privacy concerns. Microsoft is developing AI responsibly.