Microsoft AI and cloud spending hits record $37.5B as Azure growth slows

Core Insights - Meta Platforms Inc. received a positive investor response after announcing higher-than-expected capital expenditures for its AI business, with full-year capital expenditures projected between $115 billion and $135 billion, surpassing the average analyst estimate of $110.6 billion, leading to a 7% increase in shares during extended trading [1][12] Capital Expenditures - For the fiscal second quarter, capital expenditures reached $37.5 billion, marking a 66% increase from the previous year and exceeding analyst estimates of $36.2 billion [2] Azure Growth - Microsoft's Azure cloud-computing unit reported a 38% revenue increase during the quarter when adjusted for currency fluctuations, aligning with analysts' projections, although the growth rate slowed by one percentage point from the previous quarter [3] - Microsoft anticipates Azure sales to grow by 37% to 38% in the current quarter [3] Investor Concerns - Analysts expressed concerns regarding the rapid growth of capital expenditures outpacing expectations, alongside a potential slowdown in Azure's growth, raising questions about the return on investment [4] Cloud Expansion - Microsoft has seen significant growth in its cloud computing sector, aided by a partnership with OpenAI, but has faced challenges in scaling data center capacity to meet demand [6] AI Integration - Microsoft is actively integrating AI tools, including those from OpenAI, into its products, aiming to enhance sales of productivity software and cloud services [7] Earnings Performance - Microsoft reported a 17% increase in total sales to $81.3 billion for the quarter, with earnings per share at $5.16, boosted by gains from its investment in OpenAI [9] - Analysts had projected sales of $80.3 billion and earnings per share of $3.92, with customer commitments expected to materialize as sales more than doubling from the previous year, largely due to a $250 billion deal with OpenAI [10] Market Position - Microsoft is the first among the Big Three cloud service providers to report quarterly financial results this year, with Alphabet Inc. and Amazon.com Inc. scheduled to report subsequently [11]