For several months, Microsoft (MSFT, Financial) has been highlighting a rebound in its Azure cloud business. As the company prepares to release its financial report, investors are keen to see if its multi-billion-dollar investments in artificial intelligence (AI) are driving growth in its key profit engine.
Microsoft emerged as a leader in the AI race among major tech companies last year, thanks to its early investment in OpenAI. However, with plans to spend up to $80 billion on AI-related capital expenditures this fiscal year, there is growing skepticism among investors about the company's ability to profit from these investments.
In an official blog post in early January, Microsoft revealed its intention to invest $80 billion in fiscal year 2025 to build a series of dedicated AI data centers. Despite the increasing contribution from AI, Azure's performance growth has slowed for two consecutive quarters. Microsoft has indicated that a rebound in this division will only occur in the third quarter.
Last year, Microsoft's stock performance lagged behind most of its major tech competitors. On Monday, amidst a global tech stock sell-off, Microsoft shares saw a significant drop. This was triggered by the launch of a high-performance AI model by Chinese startup DeepSeek, which raised doubts about the United States' leading position in AI technology, as it operates without advanced chip support.
