Microsoft Azure: Microsoft increases data center and AI compute capex

This past quarter, Microsoft's capital expenditures increased to $10.7 billion as the company reported spending significantly on data centers, computing, and networking. The company announced that spending would increase each quarter throughout fiscal 2024, already higher than the $7.8bn capital expenditures of the preceding months.

After committing billions to OpenAI, Microsoft is the only cloud provider for the company. Microsoft, like other hyperscalers, has struggled to acquire sufficient Nvidia GPUs, signing an agreement with rival CoreWeave to use its facilities earlier this quarter to meet demand. The company views the present wave of generative AI applications as a pivotal moment, with CFO Amy Hood noting that the primary objective is to be able to meet the demand curve aggressively.

Microsoft reported an eight percent increase in revenue to $56.2 billion, which supports the expenditure. Sales of Azure increased by 27 percent, excluding the effects of foreign currency fluctuations. The company stated that approximately one percentage point of this growth was due to AI, while the next quarter will see AI growth of two percentage points.

Microsoft does not provide specific financial figures for Azure, but the Intelligent Cloud division, which encompasses Azure, generated $24 billion in revenue.