Microsoft shares drop as its AI spending surges
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Microsoft said capital expenditures, mainly on AI and cloud infrastructure, grew 66 per cent to US$37.5 billion.
PHOTO: BLOOMBERG
San Francisco – Microsoft reported on Jan 28 a 60 per cent jump in net income for the last quarter of 2025, as spending on artificial intelligence (AI) surged.
Shares in the cloud and software giant fell about 4 per cent in after-hours trading, with investors keeping a close eye on capital expenditures as the company spends heavily in the AI race against rivals Google, Amazon and Meta.
The company posted net income of US$38.5 billion (S$48.6 billion) on revenue of US$81.3 billion for the three months ended Dec 31. This was up from US$24.1 billion in profit on US$69.6 billion in revenue a year earlier.
Analysts said that the net income figure was boosted by gains from Microsoft’s investment in OpenAI, the maker of ChatGPT.
With this earnings result, “Microsoft didn’t declare victory on AI – but it made a credible case that the spending has a path to payback”, said Emarketer principal analyst Jeremy Goldman.
The company said capital expenditures, which largely consist of the massive build-out of AI and cloud infrastructure, grew by 66 per cent to US$37.5 billion.
Microsoft has continued to invest heavily in AI, including its big investments in data centres and its partnership with OpenAI.
Microsoft now holds a 27 per cent stake in OpenAI, which has quickly grown to become the world’s most valuable private company, with a US$500 billion valuation.
Azure and other cloud services saw revenue surge 39 per cent, while Microsoft 365 commercial cloud revenue rose 17 per cent, both roughly in line with analyst expectations.
The LinkedIn professional network saw revenue grow 11 per cent, while revenue from the Xbox gaming service decreased 5 per cent. AFP
