Because the launch of the ChatGPT chatbot in 2022, Microsoft has plowed increasingly more cash into constructing knowledge facilities in what one business analyst called “the most important infrastructure build-out that humanity has ever seen.”
However after 10 consecutive quarters of elevated spending for synthetic intelligence, the corporate has placed on the brakes, in response to 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 remains to be on observe to spend greater than $80 billion on capital bills within the present fiscal 12 months, 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 power in its enterprise. Gross sales surpassed $70 billion, up 13 p.c from the identical interval a 12 months earlier. Revenue rose to $25.8 billion, up 18 p.c. The outcomes far surpassed Wall Road’s expectations.
“Cloud and A.I. are the important inputs for each enterprise to develop output, cut back prices, and speed up development,” Satya Nadella, Microsoft’s chief govt, mentioned in a press release.
Microsoft’s inventory value elevated greater than 5 p.c in after-hours buying and selling after the outcomes have been introduced.
The corporate had been frantically constructing, and in current quarters, Microsoft had mentioned would have seen even increased gross sales if it had extra knowledge facilities up and working to totally provide the cloud computing and synthetic intelligence providers its clients wished.
Gross sales of Microsoft’s flagship cloud computing service, Azure, grew 33 p.c within the quarter, nicely over Wall Road’s expectations. Virtually half of that development got here from synthetic intelligence providers.
Buyers 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 knowledge facilities. The analysts mentioned a lot of that appeared tied to tasks Microsoft had meant to construct for its accomplice, OpenAI, to develop superior A.I. techniques. OpenAI is now anticipated to work with the software program maker Oracle by their Stargate project.
Microsoft has acknowledged slowing down tasks in Ohio and Wisconsin, and mentioned it had paused some early-stage tasks as a part of a “refinement” course of.
(The New York Occasions has sued OpenAI and Microsoft, claiming copyright infringement of reports content material associated to A.I. techniques. The 2 firms 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 cut back spending on development initiatives, shifting their focus to ‘conserving the lights on.’”
Microsoft’s private computing enterprise grew 6 p.c to $13.4 billion. Industrial gross sales for its on-line productiveness instruments for companies, together with Excel, Groups and Phrase, grew 15 p.c.
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.
