Microsoft has projected a record-breaking capital expenditure of $30 billion for its current fiscal first quarter, which is Q3 2025, driven by surging demand for AI services and its fast-growing Azure cloud business.
This marks the tech giant’s largest quarterly investment to date and signals its intent to pull ahead in the escalating AI infrastructure race.
The spending forecast, which beat analyst expectations of $23.75 billion, comes as Big Tech ramps up investments to meet the demands of generative AI.
It places Microsoft in a strong position to outspend rivals like Google and Meta over the next year, amid expectations that industry-wide capital expenditure could hit $330 billion in 2025.
“I feel very good that the spend we’re making is correlated to basically contracted, on-the-books business that we need to deliver,” Microsoft CFO Amy Hood told investors during a conference call on the company’s fiscal Q4 2025 earnings.
Azure revenue jumped
Azure continues to be a key engine of growth as revenue from the cloud platform jumped 39% in the June quarter, outpacing the average analyst forecast of 34.75%, according to Visible Alpha.
- Microsoft expects the momentum to continue, projecting 37% growth in the current quarter—again beating analyst estimates of 33.5%.
- In the just-ended fiscal fourth quarter, Microsoft’s capital spending climbed 27% year-on-year to $24.2 billion.
- The company said the investments are critical to easing supply constraints and building out long-term infrastructure, particularly data centers, which are essential for powering AI workloads.
Copilot hits 100 million users
Microsoft also revealed that its AI-powered Copilot tools now have over 100 million monthly active users, a milestone that underscores the commercial traction of its AI offerings. Overall, the company posted an 18% increase in revenue to $76.4 billion for the April-June period.
Though Microsoft remains second to Amazon Web Services in cloud market share, analysts say its aggressive AI integration, especially through its exclusive partnership with OpenAI, has helped it close the gap.
- The collaboration has given Microsoft a first-mover advantage, allowing it to embed advanced AI across products like its M365 suite.
- However, uncertainties loom over the OpenAI partnership, with reports suggesting the two firms are renegotiating terms. Microsoft is said to be preparing for all scenarios by developing its own AI models and broadening its partnerships with companies like Meta, xAI, and Mistral—all of which are now hosted on Azure.
- Despite those concerns, investor sentiment remains largely positive. Microsoft’s share price has risen about 20% this year, putting it within striking distance—just $200 billion—of becoming only the second company to achieve a $4 trillion market valuation.
