Microsoft scales back on AI after more than two years of aggressive spending
May 1, 2025, 10:51 AM
Sign and parking lot of a Microsoft building in Seattle. (Photo courtesy of KIRO 7)
(Photo courtesy of KIRO 7)
After 10 consecutive quarters of increasing its spending on artificial intelligence (AI), Microsoft is deciding to slightly pull back its financial commitment to the burgeoning technology.
According to a financial results report released earlier this week, Microsoft spent approximately $1 billion less on AI in the first three months of 2025 than it did in the previous quarter. Still, Microsoft invested $21.4 billion into AI over the past three months.
Microsoft was on pace to spend more than $85 billion on AI during the current fiscal year, before slightly pulling back.
This is a departure from Microsoft’s practices when ChatGPT’s chatbot first dropped in 2022. According to The New York Times, Microsoft pivoted to building AI data centers so aggressively, one industry analyst called it “the largest infrastructure build-out that humanity has ever seen.”
Demand for cloud and artificial intelligence still remains strong, Microsoft CEO Satya Nadella confirmed on an investors call.
Microsoft’s first quarter results were strong across the board. Sales surpassed $70 billion, up 13% from the same period a year earlier, while profits rose to $25.8 billion, up 18%, according to The New York Times. Microsoft’s stock price increased more than 8% in after-hours trading.
Follow @http://twitter.com/Mynorthwest
