- Microsoft says CapEx could climb 24% to $30 billion next quarter
- Nearly half of this is destined to CPU and GPU spend
- Azure cloud business continues to perform strongly thanks to efficiency gains
Microsoft has confirmed plans to invest over $30 billion in capital expenditures next quarter alone, making it the most expensive quarter for the company to date.
If Microsoft follows through, it would mark a 24% increase over its most recent financial quarter, during which the company allocated $24.2 billion to capital spending.
Although more than half went to long-lived assets with more than 15 years’ monetization potential, most of the remainder was dedicated purely to CPUs and GPUs for growing AI workloads, highlighting not only the scale of the potential, but how much interest Microsoft has, when it has the budget to allocate billions to AI.
Microsoft spending big
Microsoft’s spending spree forms part of a race to expand AI and cloud capacity as it continues to battle it out with Amazon (currently the world’s most popular cloud provider) and Google Cloud.
In terms of fiscal performance, the company’s FY25 Q4 saw an 18% year-over-year increase in quarterly revenue, to $76.4 billion.
Among its most lucrative businesses, unsurprisingly, were cloud-related products. Microsoft 365 Commercial and Consumer cloud revenue climbed 18% and 20% each, with Intelligent Cloud revenue up 26% to $29.9 billion and revenue for Azure and other cloud services up a staggering 39%.
Even though businesses everywhere want to stay on top of the AI curve, Microsoft wasn’t able to impress so much with PC shipments. Windows OEM and Devices revenue only saw a 3% rise.
“Cloud and AI is the driving force of business transformation across every industry and sector,” CEO Satya Nadella explained.
CFO Amy Hood explained that, even though Microsoft Cloud gross margin had dropped two percentage points to 68%, performance was better than anticipated thanks to “continued efficiency gains.”
