Microsoft said on Wednesday it spent nearly $35 billion on artificial intelligence in its fiscal first quarter, surpassing market expectations and overshadowing blockbuster growth in its cloud-computing business.

Microsoft's recent cloud-computing performance reflects that the company has been picking up market share at the expense of hyperscale rivals, according to Cantor Fitzgerald analyst Thomas Blakey. That's mainly driven by the company's artificial-intelligence advantages,

Microsoft reported a massive spike in its spending as the tech giant works to meet booming demand for artificial intelligence.

Microsoft's AI infrastructure spending to meet growing cloud services demand is outpacing Wall Street expectations, deepening investor fears about the

Perhaps no number is more important to Microsoft investors than the company's growth rate in the cloud. Microsoft's Azure cloud-computing business grew revenue at a 39% clip in the June quarter, and a

However, Microsoft revealed a major drop in profit due to what it termed was an “equity method investment” in OpenAI Group PBC, resulting in a 41-cents-per-share hit to its earnings and a $3.1 billion drop in its net income. Even so, the company’s bottom line was still healthy at $27.7 billion, up from $24.67 billion in the year-ago quarter.

Microsoft said the Azure cloud business, its key AI unit, grew 40% in the July-September period - its fiscal first quarter - outpacing Visible Alpha estimates of about 38.4%. The results highlight the growing returns from Microsoft's massive AI investments.