Microsoft Corp.

’s spending surged to a record high in the last three months of 2025, sending the shares down amid investor concerns that it will take longer than expected for the company’s

AI

investments to pay off.

Capital expenditures for the period hit US$37.5 billion, exceeding analyst estimates for US$36.2 billion.

The Azure cloud-computing unit posted a 38 per cent revenue gain during the quarter when adjusting for currency fluctuations, just meeting analysts’ projections.

That growth rate slowed — by a percentage point — from the prior quarter. That may have been enough to disappoint investors betting on stronger performance from the cloud unit, DA Davison analyst Gil Luria said.

Microsoft shares fell about five per cent in extended trading after closing at US$481.63 in New York.

The world’s largest software maker has experienced rapid growth in its cloud computing business, thanks in part to a landmark partnership with leading artificial intelligence startup

OpenAI

. But despite spending heavily on data centers, Microsoft has struggled to get capacity online quickly enough to meet demand.

Microsoft has been rushing to bake AI tools, including those powered by OpenAI, into its products, betting that chatbots and automation technology will boost sales of the company’s productivity software and cloud services.

Total sales increased 17 per cent to US$81.27 billion during the fiscal second quarter, while profit was US$5.16 a share, the company said in a statement on Wednesday. The net income figure was boosted by gains from Microsoft’s investment in OpenAI, which lifted per-share earnings by US$1.02.

Analysts had expected sales of US$80.31 billion and per-share earnings of US$3.92.

The value of commitments from customers that Microsoft expects to materialize as sales in future years more than doubled from a year earlier, primarily the result of a new, US$250 billion deal with OpenAI. The startup accounted for 45 per cent of Microsoft’s backlog, which stood at US$625 billion at the end of December.

Microsoft is the first of the Big Three cloud services companies to report quarterly financial results this year. Alphabet Inc. is scheduled to release its earnings on Feb. 4, Amazon.com Inc. the following day.

Meanwhile,

Meta Platforms Inc.
got a more positive investor reception

after saying it’s spending more than anticipated to build out its AI business. As part of its own quarterly earnings report Wednesday, Meta, the owner of Facebook, said full-year capital expenditures will be US$115 billion to US$135 billion, exceeding the US$110.6 billion average analyst estimate — and the shares jumped more than 10 per cent in extended trading.

  • Microsoft and Meta earnings put a focus on payoffs from AI spending
  • Microsoft’s latest AI chip to reduce reliance on Nvidia

Bloomberg.com