- Microsoft plans to increase spending on artificial intelligence and cloud services as demand increases.
- The company generated $26.7 billion in revenue this quarter from its cloud products, including Azure.
- Microsoft's spending commitment follows leaked plans to acquire 1.8 million AI chips this year.
Microsoft has no plans to slow down its spending on artificial intelligence anytime soon.
On Thursday's third-quarter earnings call, the tech giant said it will continue to invest in AI and cloud services, citing growing demand for its cloud platform Azure and rising average spending.
Microsoft Chief Financial Officer Amy Hood said on a conference call that companies will be spending “significantly” more on capital spending to buy and maintain assets.
“Currently, near-term AI demand slightly exceeds our available capacity,” Hood said.
The company spent approximately $11 billion on property, plant and equipment in the third quarter. This was an increase of 66% over spending in the same period last year.
Microsoft recorded $26.7 billion in revenue in the third quarter from its cloud products, including: azurAccording to the financial report.
AI assistant Copilot's paid membership rose 35% this quarter to 1.8 million, CEO Satya Nadella said on a conference call.
Shares rose 4% in after-hours trading after Microsoft's better-than-expected results. Both sales and earnings per share exceeded Wall Street expectations.
The company's spending expansion plans come on the heels of other major efforts in AI development. BI reported last week on leaked documents showing the company plans to acquire 1.8 million AI chips and increase data center capacity by the end of the year.
The explosion of interest in generative AI and underlying models is driving the need for more data centers, including those from Microsoft partners. OpenAIthe startup behind Chat GPT and GPT-4.
AI models need to be trained on mountains of data, which requires thousands of graphics processing units manufactured by companies like Nvidia. Microsoft is designing its own chips to reduce its dependence on Nvidia.
