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Microsoft Spends Big on AI, But Remains a Steal
The tech giant's increased capital expenditures on AI data centers weigh on profits, but the long-term outlook remains extremely positive.
Published on Feb. 11, 2026
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Microsoft's recent earnings report showed a significant increase in capital expenditures related to its AI data center construction, causing the stock price to sell off. However, the company's growth in Azure, its cloud computing segment, remains strong, and its total backlog has grown substantially, including a major deal with OpenAI. Despite the short-term impact on profits, the long-term outlook for Microsoft remains extremely positive.
Why it matters
Microsoft's investment in AI infrastructure is a strategic move to position the company for long-term growth in the rapidly evolving AI landscape. While the increased spending may weigh on profits in the short term, it demonstrates the company's commitment to staying at the forefront of this transformative technology.
The details
Microsoft spent $37.5 billion on capital expenditures last quarter, more than analysts expected, as it ramps up investment in AI data centers. This increased spending will likely lead to higher depreciation expenses and weigh on profit margins. However, the company's Azure cloud computing segment grew 39%, and its total remaining performance obligations climbed to $625 billion, up 110% year-over-year, with a significant portion coming from a new deal with OpenAI.
- Microsoft reported its most recent earnings on February 11, 2026.
- The company's capital expenditures increased significantly in the last quarter.
The players
Microsoft
A multinational technology company and one of the world's largest software and computing companies, known for products like Windows, Office, and Azure cloud services.
OpenAI
An artificial intelligence research company that has developed advanced language models and other AI technologies, and recently signed a major deal with Microsoft.
What’s next
Microsoft's increased capital expenditures on AI data centers will likely continue to impact its profit margins in the short term, but the long-term benefits of its AI investments remain to be seen.
The takeaway
Despite the short-term impact on profits, Microsoft's strategic investment in AI infrastructure positions the company for long-term growth in the rapidly evolving AI landscape. The company's strong cloud computing performance and growing backlog, even excluding the OpenAI deal, suggest that the increased spending is a necessary step to maintain its competitive edge.
