Microsoft's AI Spending Worries Investors

Record Spending, Unexpected Reaction

Technology giant Microsoft announced in its second-quarter financial results released on Wednesday that it had made $37.5 billion in capital expenditures. This figure, which exceeded market expectations by over a billion dollars, represents a 66% increase compared to the same period last year. Company executives stated that approximately two-thirds of this spending was directed towards AI infrastructure such as GPUs and CPUs.

However, while a similar report a few months ago was expected to boost the stock price, the opposite effect occurred this time. Microsoft shares lost 7% of their value following the announcement. This situation highlighted the market's urgent need to see concrete revenue growth from AI investments.

Cloud Growth Slows, OpenAI Dependency Concern

Despite record spending, a slowdown was observed in the growth rate of Microsoft's revenue from cloud services. Microsoft cloud revenues grew 39% this quarter, while the growth rate in the previous quarter was 40%. The company's CFO, Amy Hood, noted that this difference was partly due to the allocation of GPU and cloud capacity to internal teams. Hood stated that customer demand still exceeds supply.

Another source of concern for investors is Microsoft's dependency on the AI company OpenAI. A full 45% of Microsoft's remaining cloud commitments come from OpenAI alone. Uncertainties regarding OpenAI's path to profitability and growing doubts about its ability to meet trillions of dollars in commitments have highlighted this dependency as a potential risk factor. This situation is also fueling broader concerns about an AI bubble.

Market Seeks Balance

Analysts warn that if the return on AI investments takes too long or if key players like OpenAI fail to meet their obligations, a sharp correction could occur in the market. Especially considering that the US economy is largely supported by AI investments, such risks could lead to broader economic impacts.

Microsoft's strategy is also being compared to the approaches of other major players in the sector. For example, Tesla is also increasing its AI investments despite a decline in electric vehicle sales and has announced plans to build its own chip factory. Similarly, Tesla's profits are declining, yet its investments in the AI field continue. Microsoft's situation serves as a significant example of the financial costs of rapid advancement in the AI race and the limits of market patience.