SAN FRANCISCO, Jan 29 — Microsoft reported a 60% jump in net income for the fourth quarter of 2025, but heavy spending on artificial intelligence (AI) unsettled investors.
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Shares in the software and cloud giant fell about 5% in after-hours trading, as investors closely monitored the company’s capital expenditures in the AI race against rivals Google, Amazon, and Meta.
Microsoft said its capital expenditures mainly for AI and cloud infrastructure rose 66% to $37.5 billion. Analysts are also scrutinising the company’s investment in OpenAI, the developer of ChatGPT.
Microsoft now owns a 27% stake in OpenAI, which has grown to a $500 billion valuation. Concerns remain that OpenAI’s high spending could strain Microsoft’s future revenues, as roughly 45% of the company’s remaining cloud commitments come from OpenAI.
OpenAI leads in generative AI but requires billions annually to fund computing power and top engineering talent.
Despite the concerns, Microsoft beat expectations with net income of $38.5 billion on revenue of $81.3 billion for the quarter ending Dec 31, up from $24.1 billion in profit on $69.6 billion a year earlier. Analysts noted that gains from Microsoft’s OpenAI stake contributed significantly to the profit.
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Azure and other cloud services the company’s key segment saw revenue grow 39%, in line with expectations, with demand continuing to exceed supply.
“Microsoft didn’t declare victory on AI but it made a credible case that the spending has a path to payback,” said Emarketer principal analyst Jeremy Goldman.
LinkedIn revenue rose 11%, while Xbox content and services fell 5%, and Xbox hardware sales dropped 32%.
– AFP
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