Microsoft’s spending on artificial intelligence is still going up, even as questions swirl about whether returns justify the cost.
On Wednesday, the company said it spent $41 billion on capital expenditures, including data centers, in the three months that ended in June, up 69.4 percent from a year earlier. Microsoft also said its spending hit $145.3 billion in its 2026 fiscal year, which ended in June.
Microsoft’s profit for the quarter was $35.8 billion, up 31.6 percent. Revenue was $90 billion, up 17.8 percent.
Revenue at Azure, the company’s cloud computing service, which lets companies rent computer power, storage and A.I. tools, drove much of the growth, surging 43 percent. Analysts had expected growth of about 40 percent — a figure investors watch closely as the clearest sign of whether Microsoft’s A.I. spending is translating into revenue.
The results exceeded Wall Street’s projections of $87.6 billion in revenue and $31.5 billion in profit, sending Microsoft’s shares up more than 1 percent in after-hours trading on Wednesday.
The company has said demand for its cloud computing services outpaces its available data centers, requiring more spending to expand.
Microsoft’s shares have fallen since January, as investors have grown anxious about whether the hundreds of billions of dollars that it and its peers are pouring into A.I. development will convert into profit.
That anxiety was on display just last week. Alphabet, Google’s parent, reported that it had quadrupled its quarterly profit to $112 billion, strengthened largely by major investments in other A.I. companies, and raised its expected 2026 spending to a range of $195 billion to $205 billion. Its stock fell roughly 7 percent the day after the earnings call.
Much of the demand filling those data centers traces back to OpenAI. Microsoft’s relationship with the San Francisco company behind ChatGPT was overhauled late last year, when the start-up converted into a for-profit entity and Microsoft took a stake valued at roughly $135 billion. Under the revised agreement, Microsoft retained access to OpenAI’s technology through 2032.
Sales rose 14 percent to $37.8 billion for commercial subscriptions to Microsoft’s productivity tools for businesses, which include Excel, Teams and Word, as well as its A.I. assistant, Copilot. Microsoft’s personal computing business had $12.9 billion in sales, a 4 percent decline.
“This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their A.I. transformation,” Satya Nadella, Microsoft’s chief executive, said in a statement.
Microsoft has been trimming its other businesses to help pay for its A.I. push. In July, the company eliminated 20 percent of its Xbox work force as part of roughly 4,800 job cuts, and dropped several game studios.
(The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to A.I. systems. The companies have denied the claims.)
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