Because the launch of the ChatGPT chatbot in 2022, Microsoft has plowed an increasing number of cash into constructing information facilities in what one business analyst called “the biggest infrastructure build-out that humanity has ever seen.”
However after 10 consecutive quarters of elevated spending for synthetic intelligence, the corporate has tapped on the brakes, in accordance with monetary outcomes launched Wednesday.
Within the first three months of 2025, Microsoft spent $21.4 billion on capital bills, down greater than $1 billion from the earlier quarter.
The corporate indicated it was on tempo to spend greater than than $85 billion on capital bills within the present fiscal yr, which ends in June. However the pullback, although slight, is a sign that the tech business’s urge for food for spending on A.I. just isn’t limitless.
General, Microsoft’s outcomes confirmed sudden energy in its enterprise. Gross sales surpassed $70 billion, up 13 % from the identical interval a yr earlier. Revenue rose to $25.8 billion, up 18 %. The outcomes far exceeded Wall Road’s expectations.
Regardless of the financial uncertainty, the corporate predicted extra energy forward, saying income would surpass $73 billion within the present quarter.
Satya Nadella, Microsoft’s chief government, stated on a name with traders that demand for cloud and synthetic intelligence remained robust. He stated the corporate was tweaking its investments based mostly on effectivity enhancements in computing methods, which nations are driving demand, and how much companies clients need.
“We simply need to be sure we’re accounting for the newest and best data,” he stated.
Microsoft’s inventory worth elevated greater than 8 % in after-hours buying and selling after the outcomes have been introduced.
The corporate had been frantically constructing, and in current quarters, Microsoft had stated it could have seen even greater gross sales if it had extra information facilities up and operating to ship cloud computing and A.I. companies. Amy Hood, Microsoft’s finance chief, stated the constraints stay and can seemingly bleed into the beginning of the following fiscal yr.
The corporate reiterated that infrastructure spending would develop within the subsequent fiscal yr, although not as sharply as it’s within the present one.
Gross sales of Microsoft’s flagship cloud computing service, Azure, grew 33 % within the quarter, effectively over Wall Road’s expectations. Nearly half of that development got here from synthetic intelligence companies.
Traders have been bracing for a change in infrastructure spending since analysts on the funding financial institution TD Securities reported in late February that Microsoft had been pulling out of some contracts for information facilities. The analysts stated a lot of that appeared tied to initiatives Microsoft had supposed to construct for its associate, OpenAI, to develop superior A.I. methods. OpenAI is now anticipated to work with the software program maker Oracle by means of their Stargate project.
Microsoft has acknowledged slowing down initiatives in Ohio and Wisconsin, and stated it had paused some early-stage initiatives as a part of a “refinement” course of.
(The New York Instances has sued OpenAI and Microsoft, claiming copyright infringement of stories content material associated to A.I. methods. The 2 corporations have denied the go well with’s claims.)
Analysts on the funding agency Raymond James wrote final week that they’d not but detected main reductions in spending by Microsoft’s enterprise cloud clients. However they’re involved that tariffs and the unsure financial system would possibly lead clients “to scale back spending on development initiatives, shifting their focus to ‘maintaining the lights on.’”
“We proceed to see robust demand for our cloud and A.I. choices,” Ms. Hood stated.
Microsoft’s private computing enterprise grew 6 % to $13.4 billion. That benefited partially from laptop producers making extra laptops with the Home windows working system, so that they have stock obtainable amid the tariff uncertainty.
Business gross sales for its on-line productiveness instruments for companies, together with Excel, Groups and Phrase, grew 15 %.
Microsoft’s outcomes would have been even stronger have been it not for the weakened U.S. greenback, which diminished income by greater than $1 billion and revenue by nearly $400 million.
