Microsoft gears up to spend over $100b in capex this fiscal year

• For the current first quarter, the company predicts a jaw-dropping $30b in spending, breaking its own record for single-quarter investment.

If you ever wanted to see what major ambition looks like in the digital age, take a close look at Microsoft.

Marking its half-century milestone since Bill Gates and Paul Allen launched it in New Mexico back in 1975, the legendary tech company is today pouring the kind of money you can almost hear whistling through server racks on its way out the door.

These days, the numbers attached to Microsoft’s artificial intelligence dreams are almost as jaw-dropping as its stock price.

In the most recent fiscal fourth quarter, Microsoft once again bested Wall Street’s forecasts—a now-common achievement, as proven by its five-quarter streak of outperforming analysts.

Investors—maybe with confetti already in hand—watched as Microsoft’s shares hovered just shy of record highs, swelling by 22 per cent since the start of the year.

The company reported $76.4 billion in quarterly revenue, handily beating expectations and posting an 18 per cent year-over-year jump. That includes a sparkling $3.65 in earnings per share, well ahead of consensus.

So, where does all that cash go?

Into the great digital unknown, otherwise known as capital expenditures—and the amounts are staggering. Microsoft is gearing up to spend over $100 billion in capex in its next fiscal year, a 14 per cent jump from last year’s already-lofty tally.

For the current first quarter alone, the company predicts a jaw-dropping $30 billion in spending, breaking its own record for single-quarter investment.

If that figure turns out as forecasted, Microsoft could outpace fierce rivals Alphabet (Google) and Amazon in the race for world-dominating data center capacity over the next year.

This mad dash for digital horsepower isn’t just for bragging rights. Microsoft’s Azure cloud division is on a rocket ride, now surpassing $75 billion in yearly revenue thanks to the relentless demand for AI-powered services.

Satya Nadella, still steering the ship as CEO, said: “Cloud and AI is the driving force of business transformation across every industry and sector.”

Azure’s 34 per cent growth is proof positive that companies everywhere are shifting their computing needs to the cloud—and they want Microsoft’s brand of smarts to help them do it.

Big Tech’s capital spending

Of course, it’s not only Microsoft hurling money at the problem. Just last week, Google announced it would invest $85 billion in 2025—$10 billion more than it had planned—while Amazon is sprinting to meet its own $100 billion commitment.

This mass buildout means Big Tech’s capital spending might top $330 billion this year alone. Meta, not to be left behind, is also opening its wallet wide, but with a slightly cooler approach to capital outlays.

Money isn’t only flowing into hardware and buildings, either. The war for AI talent has gotten so feverish that $100 million signing bonuses are being dangled by Meta to lure experts from OpenAI, with reports of $200 million offers for top Apple engineers. Finding the brains who can actually build all this next-generation technology isn’t easy—or cheap.

Meanwhile, Microsoft isn’t shy about showing what all this investment is buying. Its Copilot AI now claims over 100 million monthly active users—a big milestone, though still dwarfed by Google’s Gemini, which boasts 450 million. As the numbers get bigger, so do the stakes.

Is it worth it? For now, investors certainly seem to think so. “I feel very good that the spend that we’re making is correlated to basically contracted, on-the-books business that we need to deliver,” CFO Amy Hood told analysts—her confidence mirrored by a $500 billion surge in AI stocks following Microsoft and Meta’s blockbuster quarters.

The game is on, and from the look of things, Microsoft is quite comfortable playing at these dizzying heights.