Microsoft's CFO highlights record infrastructure investments, OpenAI deal in internal memo (www.businessinsider.com)

Microsoft reported a stronger-than-expected Q1 with $77.7 billion in revenue, but the market reaction was muted after an Azure outage and investor concerns that cloud/AI demand is outstripping supply. In an internal memo, CFO Amy Hood emphasized a record $34.9 billion in capital expenditures this quarter for GPUs, CPUs and datacenter infrastructure to "expand capacity and support strong demand signals." Microsoft Cloud revenue was $49.1 billion (up 26%), Azure and other cloud services grew ~39% in constant currency, and commercial remaining performance obligation jumped over 50% to $392 billion — showing steep, accelerating demand for full-stack cloud + AI offerings. The memo also noted a new, post-quarter deal with OpenAI that gives Microsoft a roughly 27% stake in OpenAI’s for‑profit arm and relaxes its right of first refusal for new compute — a move Hood called a “big step” in a partnership that’s already reshaping the industry. Technically, the story underscores two tensions for the AI/ML community: (1) hyperscalers are pouring unprecedented capex into GPUs/CPUs and datacenter buildouts to host large models and enterprise AI, and (2) capacity and reliability (e.g., Azure outages) are real bottlenecks that could constrain model deployment, costs, and ROI. The deal further aligns Microsoft’s cloud stack with a leading model provider, strengthening its product roadmap (Copilot, M365 integrations) but also heightening scrutiny on whether massive infrastructure spending will pay off.