For the first time in over two times, Microsoft’s capital expenditures have dipped and while the company insists it’s just a matter of timing, the optics have sparked broader questions about the pace and shape of its AI and pall structure intentions.
During its Q3 FY2025 earnings call, Microsoft posted capex of$ 21.4 billion, a drop from$ 22.6 billion in the previous quarter. CFO Amy Hood explained the drop as due to” normal variability” in data center leasing, dismissing fears that it indicates a change in strategy. But the environment is hard to ignore earlier reports revealed Microsoft had walked back as important as 2GW in planned data center systems across the U.S. and Europe. Still, there’s no deficit of instigation away.
Microsoft Cloud profit surged to$ 42.4 billion, over 20 time-over-year. 1 .Azure alone grew 33, with AI fueling nearly half that rise. The Intelligent Cloud member, which includes Azure and garçon products, posted$ 26.7 billion in profit — over 21 from the same period last time.
CEO Satya Nadella assured investors that data center shapes are ongoing, noting new installations launched in 10 countries this quarter. Nadella also stressed that spanning structure moment means erecting smart, not just presto. “ You do n’t want to be upside down when the shape of demand changes, ” he said, suggesting to the shift from general cipher to AI-heavy workloads. While the pall story is upbeat, on- prem garçon profit continues to decline, falling six percent — part of a broader client shift to pall-native operations.
Microsoft closed the quarter with$ 70.1 billion in profit and$ 25.8 billion in net income. But indeed with those figures, all eyes are on how the company navigates rising AI demand without overrunning structure bets — a balancing act with both specialized and geopolitical weight.
