"During the earnings call with analysts after market close on Wednesday, chairman and CEO Satya Nadella and chief financial officer Amy Hood were pressed on investor fears over a slowdown in revenue growth for the Azure platform amid soaring capital expenditures-both signs that the company is struggling to keep up with AI demand. Those two figures combined have given rise to questions about whether Microsoft can build out computing capacity as fast as planned, and if that issue will further limit Azure's growth."
"To level-set: Microsoft spent $34.9 billion on capital expenditures in the first quarter of fiscal 2026 alone, with roughly half dedicated to assets including GPUs and CPUs, which are the chips it uses in PCs, servers, and the Azure data centers. In Q2, capex was roughly $37.5 billion, which brought the first half total to $72.4 billion, signaling significant infrastructure spending."
Microsoft's cloud revenue exceeded $50 billion in a quarter and its demand backlog more than doubled to $625 billion, boosted by OpenAI. Azure revenue growth slowed and the company reported capacity constraints that will last at least through the fiscal year end in June. The stock fell nearly 5% in after-hours trading after the earnings release. Executives faced questions about rising capital expenditures and the company's ability to expand computing capacity fast enough to meet AI demand. Capital spending reached $34.9 billion in Q1 and about $37.5 billion in Q2, totaling $72.4 billion in the first half, with roughly half spent on GPUs and CPUs.
Read at Fortune
Unable to calculate read time
Collection
[
|
...
]