Microsoft’s AI Cloud Growth Fuels Record $30 Billion Capex Forecast
Microsoft has projected a record $30 billion in capital spending for its current fiscal first quarter, driven by strong growth in its Azure cloud business. The software giant announced this on Wednesday, shortly after reporting that annual Azure sales had exceeded $75 billion for the first time.
Following the announcement, Microsoft’s shares rose 9% in extended trading. The upbeat results and bold spending plan boosted confidence that its AI investments are delivering real financial returns.
Capital Spending Pushes Microsoft Ahead of Rivals
This record-high capital expenditure forecast puts Microsoft ahead of other tech giants in AI spending. While Google and Meta are also investing heavily in AI infrastructure, Microsoft’s latest figure exceeds analysts’ expectations of $23.75 billion.
Together, Microsoft and Meta’s positive results added roughly $500 billion in value to AI-related stocks. These outcomes suggest that heavy investments in data centres and AI systems are starting to pay off.
Microsoft Chief Financial Officer Amy Hood said that the spending is tied to existing contracts, ensuring it supports business already on the books.
Azure and Copilot See Strong Growth
Microsoft reported a 39% rise in Azure revenue during the June quarter, topping the expected growth of 34.75%. For the next quarter, Microsoft anticipates 37% growth, ahead of the forecasted 33.5%.
Its AI-powered tools are also gaining traction. Copilot, Microsoft’s enterprise AI assistant, now has over 100 million monthly active users. This is the first time the company has shared user numbers for the tool. For comparison, Google’s Gemini AI has 450 million users.
Total revenue for the fiscal fourth quarter rose 18% to $76.4 billion, exceeding the estimate of $73.81 billion.
Microsoft Shifting Asset Strategy and OpenAI Concerns
Microsoft’s capital investments are increasingly going into longer-lived assets like data centres. This is a slight shift from its earlier focus on short-term assets like chips, expected to dominate in fiscal 2026. However, Microsoft confirmed it will continue to invest in longer-term infrastructure where demand requires it.
Despite these gains, questions remain over Microsoft’s relationship with OpenAI. As the two renegotiate their agreement, concerns have grown over how much access Microsoft will retain to OpenAI’s technology and its stake if OpenAI becomes a public-benefit corporation.
To reduce dependency, Microsoft is now developing its own AI systems. It is also expanding its offerings by hosting models from partners such as xAI, Meta, and France’s Mistral on Azure.
Strong Position in Competitive AI Market
Microsoft continues to close the gap with Amazon Web Services, which leads the cloud market with over $107 billion in annual revenue. Azure’s new revenue figure strengthens investor belief in Microsoft’s AI strategy.
Dan Morgan of Synovus Trust, which holds Microsoft shares, said, “The bar was set really high. And my impression is they delivered.”
With its market value now just $200 billion away from the $4-trillion mark, Microsoft remains one of the top players in the race to dominate AI.
with inputs from Reuters
