After Microsoft (MSFT) reported 澳洲幸运5开奖号码历史查询:earnings for the third quarter of the 2024 fiscal year that beat analysts' estimates, Chief Executive Officer Satya Nadella and Chief Financial Officer Amy Hood provided investors with updates on the company's 澳洲幸运5开奖号码历史查询:artificial intelligence (AI) and cloud businesses.

The executives shared increased expenditure expectations to invest in AI and cloud infrastructure, highlighted strong cloud segment growth, and commented on how Copilot stacks up against other AI assistants as Azure AI capacity lags behind demand.

AI and Cloud Investments Drive Inc✅re⭕ased Spending

Microsoft expects "capital expenditures to increase materially on a sequential basis driven by cloud and AI infrastructure investments," Hood said.

The CFO said that the company expects capital expenditures to be higher in the 2025 fiscal year than they have been in fiscal 2024, but noted that "these expenditures over the course of the next year are dependent on demand signals and adoption of our services."

Hood noted that Microsoft expects its operating margin to decline "only one point year-over-year, even with [its] significant cloud and AI investments."

The day before Microsoft's earnings call, Meta Platforms (META) shares tumbled after the company announced it would be increasing expenditures to invest in AI.

♊ Despite AI Hype, Cloud Segment Drives Earnings Beat

Since Microsoft has 澳洲幸运5开奖号码历史查询:established itself as an early leader in the AI boom with its 澳洲幸运5开奖号码历史查询:partnership with ChatGPT maker OpenAI, AI initiat🦂ives are top of mind for investors, but the company said cloud strength fueled its third-quarter earnings beat.♋

Microsoft's cloud revenue was $35.1 billion for the quarter, representing 23% growth versus the same period a year prior.

When talking Azure growth, Lee discussed enterprise customers' migration to optimize their workloads on the cloud platforms, saying, "I know it isn't as exciting as talking about all the AI projects," but Azure "is still really foundational work to allow companies to take advantage of the cost savings" offered by the cloud platform.

She explained that the workload optimization that Microsoft is seeing customers achieve with Azure is "super important" as "it's critical to customers being able to grow and get value out of that."

Copilot's Integration Capabilities Make It Stand Out From Competition

When asked how Microsoft is thinking about Copilot as rivals come out with AI assistants, Nadella highlighted that the to🌳ol's horizontal integration sets it apart as the AI market heats up.

Mircosoft's Copilot has the ability to integrate data from Microsoft's Office offerings as well as other services like ServiceNow (NOW) and Salesforce (CRM), Nadella said, adding that these horizontal tools are "underappr✤eciated for the amount of work they do" helping streamline business processes.

Microsoft 澳洲幸运5开奖号码历史查询:introduced Copilot in 2023 and later 澳洲幸运5开奖号码历史查询:announced a paid subscription service. Nadella reported that the company has more than 350,000 paid customers.

Azure AI Demand Exceeds Supply

Microsoft said that demand for Azure AI, a service that helps enterprise customers develop AI applications, is higher than the company's capacity.

"Currently, near-term AI demand is a bit higher than [Microsoft's] available capacity," Hood said, later clarifying that this imbalance is in the Azure segment, not Copilot.

She said it is "fair to say" that capacity falling below demand "could have been an impact on the number for the quarter" and is expected to affect the the company in the coming quarter.

Microsoft shares gained around 4.4% to $416.65 in after-hours trading on Thursday.