After Microsoft (MSFT) reported better-than-expected earnings for the fiscal fourth quarter but its cloud growth missed estimates, executives gave investors an update on the tech giant’s investments in artificial intelligence (AI), capacity constraints, outlook, and more in the company’s earnings call.
Microsoft CFO Amy Hood said that the company’s AI-related capacity lagging demand, coupled with weakness in some European regions, contributed to the company’s softer-than-expected cloud growth.
The CFO said there “was some softness on non-AI consumption” in some European markets, and that “capacity constraints particularly on AI and Azure” contributed to cloud revenue coming in at the lower end of previous guidance ranges.
Hood added that AI capacity could continue to lag behind demand until the second half of 2025.
Microsoft, along with many of its big tech peers, is boosting its investments in AI to secure its position as a leader in the space, raising concerns about higher costs.
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