Microsoft says OpenAI is driving 45% of the backlog for Azure cloud computing (www.businessinsider.com)

Microsoft reported a significant backlog in its Azure cloud services, with OpenAI driving approximately 45% of the total commitments, which reached $625 billion—a 110% increase year-over-year. Despite surpassing earnings expectations for the second quarter, the company's share price fell over 6% in after-hours trading, reflecting investor concerns over slowing revenue growth in Azure and potential over-dependence on OpenAI. This situation highlights critical capacity constraints that Microsoft is facing, as the tech giant navigates the burgeoning demand for AI services amid increasing capital expenditures, which rose 66% to $37.5 billion. CEO Satya Nadella emphasized the importance of balancing Azure client acquisition with investments in other revenue-generating services, such as Microsoft 365 and GitHub. Additionally, both Microsoft and OpenAI are grappling with resource allocation challenges as they expand their AI capabilities, pointing to a broader trend in the AI race where companies must manage compute capacity carefully to sustain innovation and growth.