Microsoft capital spending jumps, cloud revenue fails to impress, shares drop after hours

Microsoft just posted results that look “fine” on the surface, but the market is laser-focused on 2 things: 1) record AI capex (about $37.5B in the quarter, up roughly 66% YoY) and 2) Azure growth that only barely beat expectations. The stock slid after-hours because investors want clearer proof that AI spending is translating into faster, higher-margin growth.

Winners

AI compute and networking suppliers

If Microsoft keeps spending aggressively on AI capacity, the biggest near-term beneficiaries are the companies selling the chips, servers, and high-speed networking that go inside data centres.

Names: $NVDA (NVIDIA), $AVGO (Broadcom), $ANET (Arista Networks)

Data-centre buildout and power and cooling ...