Microsoft investors are alarmed by the company's spending on AI
Microsoft reported revenue of $77.7 billion for the quarter, up 18% from a year earlier, but spending on AI infrastructure hit a record $35 billion, raising concerns among investors.
Microsoft reported revenue of $77.7 billion for the quarter, up 18% from a year earlier, but spending on AI infrastructure hit a record $35 billion, raising concerns among investors.
Microsoft's spending in the first fiscal quarter rose 74% from a year earlier, Reuters reported . About half of that was spent on short-term assets such as expensive Nvidia chips to address capacity bottlenecks in its Azure cloud business.
Capacity growth and high demand for artificial intelligence services from companies rushing to implement the technology helped Microsoft Azure's cloud business grow by 40% between July and September.
Microsoft is forecasting a 37% increase in Azure revenue for the current quarter. Microsoft CFO Amy Goode said the company expects to see a cap on its AI capabilities at least through the end of the fiscal year. Microsoft said total revenue will be between $79.5 billion and $80.6 billion.
“We continue to see demand that exceeds our available capacity. Our capital spending strategy remains unchanged: we are responding to the demand signals that we are seeing,” Jonathan Neilson, Microsoft’s vice president of investor relations, told Reuters.
The company's shares fell 3.6% in after-hours trading. The rising costs come as pressure mounts on big tech companies to demonstrate the profitability of their massive investments in artificial intelligence.
Additional investor concerns are caused by cyclical deals, soaring valuations, and limited evidence of AI productivity gains, raising doubts about the longevity of the AI boom.
Microsoft reported an 18% increase in total revenue to $77.7 billion. The results came after Microsoft struck a deal with OpenAI this week that gave it a 27% stake worth about $135 billion, as well as a share of sales and access to intellectual property.
Microsoft and OpenAI have secured independent verification of AGI: OpenAI's claims will be verified by an external expert panel
Microsoft and OpenAI have secured independent verification of AGI: OpenAI's claims will be verified by an external expert panel
Thanks to the AI boom, Microsoft CEO received a record amount of compensation - almost $100 million
Thanks to the AI boom, Microsoft CEO received a record amount of compensation - almost $100 million
"Make statistics more convenient." The State Statistics Service of Ukraine has entered into a partnership with Microsoft to implement AI
"Make statistics more convenient." The State Statistics Service of Ukraine has entered into a partnership with Microsoft to implement AI
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