Microsoft’s Chief Financial Officer, Amy Hood, announced a record spending of $34.9 billion on infrastructure in an internal memo, addressing the growing demand for artificial intelligence (AI). The memo followed the company’s earnings report for the first quarter of its fiscal year, which concluded in September, revealing revenues of $77.7 billion—a figure that surpassed Wall Street expectations.
The announcement comes as Microsoft faces challenges in meeting the soaring demand for AI and cloud computing resources, evidenced by a recent outage in its Azure service. In after-hours trading, Microsoft’s stock fell by over 3%, raising concerns among investors about the sustainability of Big Tech’s significant investments in AI infrastructure.
Hood’s quarterly memos typically summarize key financial results while highlighting significant developments. In this memo, she emphasized the company’s substantial investment in computing resources such as GPUs and CPUs, aimed at expanding capacity and addressing robust demand signals. “Demand continues to accelerate, and we’re investing to capture the opportunity ahead,” she stated. Microsoft had forecasted a capital expenditure of $30 billion for the quarter.
In addition to infrastructure investments, Hood referenced a new agreement between Microsoft and OpenAI. Microsoft now holds a 27% stake in OpenAI’s for-profit business, which is valued at approximately $135 billion. While Hood described the deal as “another big step forward in a partnership that has been transformative for our industry,” she clarified that the agreement did not impact the latest financial results since it was signed after the quarter closed.
The memo noted that Microsoft Cloud revenue reached $49.1 billion, reflecting a growth of 26% compared to the previous year. This growth is attributed to increasing customer trust and the company’s ability to support innovation and digital transformation.
Hood also encouraged employees to tune into the company’s earnings call for comprehensive insights into the quarter’s performance and a preview of the upcoming second quarter. She highlighted the importance of collaboration within the company as it strives to meet the escalating demands of its customers.
Looking ahead, Microsoft is gearing up for its Ignite conference, scheduled for November 18-21, where it will showcase its latest innovations. Hood noted the opening day keynote will feature discussions on how Microsoft is leveraging AI and cloud technologies to deliver impactful solutions.
As Microsoft continues to navigate the competitive landscape of AI, the company’s record investments signal its commitment to capturing future opportunities while addressing immediate challenges in infrastructure supply and demand.
