Microsoft’s spending on artificial intelligence infrastructure hit a record $35 billion in the September quarter, raising concerns about costs. Capital outlay rose 74% year over year, with half going to short-term assets. Azure cloud business grew 40%, exceeding estimates. Shares dropped 2% in extended trading due to capex worries.

Big Tech faces pressure to show returns on massive AI investments. Meta and Alphabet plan increased spending. Concerns about circular deals, valuations, and AI productivity gains persist. Despite a decline in Microsoft shares, operating income rose 24%. Revenue jumped 18% to $77.7 billion, beating expectations.

Microsoft’s revised deal with OpenAI gave it a 27% stake worth $135 billion. The partnership, providing access to ChatGPT models, fuels Azure’s growth and challenges Amazon in cloud services. Microsoft’s AI push has made it the world’s second-most valuable firm. Analysts praise Microsoft’s strategy to diversify AI partnerships for profitability.

Read more at Yahoo Finance: Microsoft’s massive AI spending draws investor concerns as cloud business booms