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World of Software > News > Microsoft Profit Increases 18% While It Slows A.I. Spending
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Microsoft Profit Increases 18% While It Slows A.I. Spending

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Last updated: 2025/04/30 at 6:05 PM
News Room Published 30 April 2025
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Since the release of the ChatGPT chatbot in 2022, Microsoft has plowed more and more money into building data centers in what one industry analyst called “the largest infrastructure build-out that humanity has ever seen.”

But after 10 consecutive quarters of increased spending for artificial intelligence, the company has put on the brakes, according to financial results released Wednesday.

In the first three months of 2025, Microsoft spent $21.4 billion on capital expenses, down more than $1 billion from the previous quarter.

The company is still on track to spend more than $80 billion on capital expenses in the current fiscal year, which ends in June. But the pullback, though slight, is an indication that the tech industry’s appetite for spending on A.I. is not limitless.

Overall, Microsoft’s results showed unexpected strength in its business. Sales surpassed $70 billion, up 13 percent from the same period a year earlier. Profit rose to $25.8 billion, up 18 percent. The results far surpassed Wall Street’s expectations.

“Cloud and A.I. are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” Satya Nadella, Microsoft’s chief executive, said in a statement.

Microsoft’s stock price increased more than 5 percent in after-hours trading after the results were announced.

The company had been frantically building, and in recent quarters, Microsoft had said it would have seen even higher sales if it had more data centers up and running to fully supply the cloud computing and artificial intelligence services its customers wanted.

Sales of Microsoft’s flagship cloud computing service, Azure, grew 33 percent in the quarter, well over Wall Street’s expectations. Almost half of that growth came from artificial intelligence services.

Investors have been bracing for a change in infrastructure spending since analysts at the investment bank TD Securities reported in late February that Microsoft had been pulling out of some contracts for data centers. The analysts said much of that appeared tied to projects Microsoft had intended to build for its partner, OpenAI, to develop advanced A.I. systems. OpenAI is now expected to work with the software maker Oracle through their Stargate project.

Microsoft has acknowledged slowing down projects in Ohio and Wisconsin, and said it had paused some early-stage projects as part of a “refinement” process.

(The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to A.I. systems. The two companies have denied the suit’s claims.)

Analysts at the investment firm Raymond James wrote last week that they had not yet detected major reductions in spending by Microsoft’s enterprise cloud customers. But they are concerned that tariffs and the uncertain economy might lead customers “to reduce spending on growth initiatives, shifting their focus to ‘keeping the lights on.’”

Microsoft’s personal computing business grew 6 percent to $13.4 billion. Commercial sales for its online productivity tools for businesses, including Excel, Teams and Word, grew 15 percent.

Microsoft’s results would have been even stronger were it not for the weakened U.S. dollar, which reduced revenue by more than $1 billion and profit by almost $400 million.

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