Business
Microsoft Plans Record $190B in Spending as Azure Cloud Growth Stays Strong
Microsoft has forecast Azure cloud revenue growth of 39-40% for Q4 2026 and revealed plans to spend a record $190 billion this year, well above analyst estimates of $150 billion. Google Cloud grew 63% last quarter, significantly outpacing Microsoft. Microsoft's Copilot AI assistant reached 20 million users, up from 15 million in January. The company has also renegotiated its OpenAI deal, locking in its revenue share through 2030 but losing exclusive rights to resell OpenAI products,opening the door for Google and Amazon to offer the same models on their own cloud platforms.
Microsoft has predicted strong Azure cloud growth and announced record $190 billion in spending this year, well above analysts' forecasts. However, Google Cloud is growing even faster, Copilot has been adopted for over two years and Microsoft is losing its exclusive rights to resell the OpenAI products.
Key Highlights
- For Q4, Microsoft predicted Azure cloud revenue growth of 39-40%, above the $35.28B consensus (36.7% expectations).
- In 2026, the company is expected to spend a record $190 billion, well above analyst projections of $150 billion.
- Measured by revenue, Google Cloud grew at 63% last quarter.
- Microsoft’s M365 Copilot AI assistant has 20 million users, up from the 15 million figure seen in January.
Azure Grows But Google Grows Faster
In its fiscal third quarter, Microsoft said that Azure cloud revenue grew by 40%, just ahead of the 39% growth seen in the previous quarter and in line with analyst expectations. Microsoft guided for 39-40% growth in Q4, which is higher than the average estimate of 36.7%.
The numbers sound decent until you look at Google's Cloud, which leaped 63% last quarter crushing such estimates by some distance with 50.1% growth. Alphabet shares were up 4.1% in after-hours trading, while Microsoft shares were little changed, having recovered from a 2% drop as the initial results of both companies rolled out.
Microsoft Bets $190 Billion on AI Infrastructure
Microsoft said it anticipates spending $190 billion in capital expenditure midway through 2026, a record number that blows analyst expectations of anything over $150 billion out of the water. For the third quarter alone capital expenditures were up 49% year on year now at $31.9 billion.
Cloud capacity shortages have hindered revenue growth, this plan is the company’s response. Microsoft said its AI business is operating at a $37 billion annual revenue clip for infrastructure sold to third parties, such as OpenAI, in addition to its own sales of AI. Microsoft earlier this month initiated its first employee buyout program in more than 50 years to fund these outlays.
Copilot Is Getting Bigger, But Big Business Customers Are Slow to Adopt
Microsoft’s M365 Copilot AI assistant, priced at $30 per month, gained 20 million users in Q3, compared to only 15 million users in January. That is 5 million new seats in a single quarter, something that Microsoft’s investor relations VP Jonathan Neilson said puts Microsoft “in very good shape”. However, investors are still worried that big enterprise customers were slow to implement Copilot at scale, a concern that’s been an issue for how the market is positioning Microsoft’s AI momentum against their peers. To further diversify its AI portfolio away from its OpenAI dependence, Microsoft has included Anthropic’s Claude technology into the mix for its cloud and Copilot products.
FAQs
1. How many people use Microsoft OpenAI?
20 million users as of Q3 2026, up by 5 million since January, but large enterprise adoption is still slow.
2. Is OpenAI now locked into Microsoft forever?
Not at all, it restructured its agreements to secure a revenue share until 2030 but relinquished exclusive rights as the cloud reseller for OpenAI products, which means Google and Amazon are also able to redistribute these products now.
3. Is Microsoft cutting jobs?
Responding to the needs of the bottom line, yes, it unveiled its first employee buyout scheme in over half a century earlier this month as it seeks balance with historic spending commitments against record resources.
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