Microsoft reports stronger-than-expected earnings as it ramps up capital spending

• Microsoft's Q1 profits hit analysts' estimates arsenic unreality computing continued to grow.
• Q1 superior spending reached $20 billion, up from $19 cardinal successful Q4.
• Microsoft shares edged higher successful after-hours trading.

Microsoft reported better-than-expected first-quarter results aft nan closing doorbell connected Wednesday, and continued to ramp up its superior spending arsenic it invests successful AI capabilities.

Capex totaled $20 billion, compared pinch $19 cardinal successful its fiscal 4th fourth and $14 cardinal successful nan 4th earlier that.

Much of nan company's spending has been going toward information centers, graphics processing units, and different AI projects. By twelvemonth end, Microsoft intends to amass 1.8 cardinal GPUs. By July 2025, nan Redmond, Washington, institution plans to triple its data-center capacity. The institution is trying to fig retired really it will recoup this monolithic investment.

Also successful nan first quarter, Microsoft Cloud gross roseate 22% from a twelvemonth earlier to $38.9 billion. Analysts, connected average, had expected gross for nan business would full $38.11 billion, per Bloomberg.

Shares roseate much than 1% successful precocious trading.

Some analysts person been captious of nan company's spending connected artificial intelligence, arsenic Business Insider antecedently reported.

"We are expanding our opportunity and winning caller customers arsenic we thief them use our AI platforms and devices to thrust caller maturation and operating leverage," nan company's president and CEO, Satya Nadella, said successful nan net announcement.

The study follows Microsoft's August announcement that it would reconfigure really it reported results from its business units. The Productivity and Business Processes conception includes results from Microsoft 365 Commercial products and unreality services.

Here are respective cardinal metrics for nan 4th that ended September 30 and really they compared pinch analysts' statement expectations arsenic reported by Bloomberg.

• Earnings per share: $3.30 vs. $3.11 expected
• Revenue: $65.59 cardinal vs. $64.51 cardinal expected
• Operating income: $30.6 cardinal vs. nan $29.21 cardinal expected
• Microsoft Cloud revenue: $38.9 cardinal vs. nan $38.11 cardinal expected

Investors person been search spending connected AI astatine galore of nan alleged Magnificant 7 stocks, of which Microsoft is 1 — on pinch chap tech giants including Apple, Amazon, Google genitor Alphabet, and Nvidia. One interest is that returns connected companies' AI investments could autumn short of expectations. That's a interest astatine Microsoft partially because feedback connected nan company's Copilot AI has been mixed.