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Key takeaways
- Microsoft said its capital expenditures rose to $34.9 billion in the first fiscal quarter, up from $24.2 billion in the fourth quarter, as the company races to keep up with demand for artificial intelligence.
- Microsoft’s quarterly earnings beat analyst estimates, as artificial intelligence continued to drive sales of its Azure cloud computing service.
Microsoft has announced a huge rise in its spending as the technology giant works to meet the growing demand for artificial intelligence.
The tech giant said Wednesday that its capital expenditures rose to $34.9 billion in the fiscal first quarter, up from $24.2 billion in the fourth quarter, with most of the money going toward investments in building artificial intelligence infrastructure.
CEO Satya Nadella told investors on an earnings call Wednesday that the company expects to double its data center footprint over the next two years, “reflecting the demand signals” the company is seeing for AI, according to a transcript provided by AlphaSense.
Why is this important to investors?
Microsoft and many of its Big Tech peers have been rapidly increasing investments in data centers to support AI-driven growth, raising some concerns about whether their spending will pay off, although Microsoft’s strong quarterly results could be seen as a positive signal for demand.
Microsoft’s cloud and artificial intelligence offerings helped deliver better-than-expected results in its fiscal first quarter, with earnings per share of $3.72 on revenue that jumped 18% year over year to $77.7 billion. Both numbers exceeded analyst estimates compiled by Visible Alpha.
Revenue for Microsoft’s Intelligent Cloud division, which includes the Azure cloud computing service, rose 28% to $30.9 billion, slightly more than the $30.3 billion that analysts had expected.
Looking ahead, Microsoft said it expects current quarter revenue to range from $79.5 billion to $80.6 billion. Analysts had expected $80.14 billion.
Microsoft shares fell about 2% in extended trading after the results. They’re up about 30% for 2025 through Wednesday’s close.
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