Microsoft’s record AI outlays unsettle investors even as Azure’s growth surges

Microsoft’s AI bet is getting more expensive—and bigger. The software giant said capital spending jumped 74% in the September quarter to nearly $35 billion, with about half going to short-term assets such as Nvidia chips to ease capacity constraints, topping Visible Alpha’s $30.34 billion estimate. Azure revenue rose 40% in the period, beating expectations and underscoring robust enterprise demand for AI services that continues to outstrip supply. Shares slipped roughly 2% after hours on capex worries, even as total revenue climbed 18% to $77.7 billion and profit hit $3.72 a share, both ahead of forecasts. Microsoft also cemented a revised OpenAI pact that gives it a 27% stake valued around $135 billion and exclusive access to models behind ChatGPT—critical fuel for Azure and 365 Copilot. The spending surge echoes peers: Meta flagged notably higher 2026 outlays and Alphabet raised full-year capex, intensifying pressure to translate AI enthusiasm into durable returns.

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