Microsoft demand backlog doubles to $625 billion thanks to OpenAI, but hefty spending and slower revenue growth spook investors

It was an earnings report that contained some stunning numbers: Microsoft reported crossing a significant $50 billion quarterly revenue milestone for its cloud business, and said its demand backlog had more than doubled, to $625 billion, with a boost from OpenAI. But the tech giant’s stock tumbled nearly 5% in after-hours trading, following a second quarter earnings release that showed a slowdown in Azure revenue growth and capacity constraints that Microsoft admitted will extend to “at least” the end of its fiscal year in June. 

During the earnings call with analysts after market close on Wednesday, chairman and CEO Satya Nadella and chief financial officer Amy Hood were pressed on investor fears over a slowdown in revenue growth for the Azure platform amid soaring capital expenditures—both signs that the company is struggling to keep up with AI demand. Those two figures combined have given rise to questions about whether Microsoft can build out computing capacity as fast as planned, and if that issue will further limit Azure’s growth. Essentially, investors are worried they might be seeing the first blush of a yellow flag. 

“One of the core issues that is weighing on investors is capex is growing fas...