Microsoft Corp. is still suffering from a computing capacity crunch despite massive spending on data centers, a scenario that weighed on the company’s closely watched Azure cloud unit.

The company is seeing more demand for its cloud computing and AI services than it can keep up with, a challenge that is supercharging profits.

Microsoft has pulled this off while relaxing its grip on Open AI by, for instance, letting it use alternative sources of computing power so long as it asks first. On October 28th Microsoft loosened the setup once again,

The company’s A.I. offerings are driving “real-world impact,” Satya Nadella, Microsoft’s chief executive, said in a statement. “It’s why we continue to increase our investments in A.I. across both capital and talent to meet the massive opportunity ahead.”

The AI tool will help researchers accelerate the pace of their analysis and discover patterns it would take humans a long time to find on their own.

Microsoft's AI infrastructure spending to meet growing cloud services demand is outpacing Wall Street expectations, deepening investor fears about the costs of sustaining the boom. The technology giant reported a record capital expenditure of nearly $35 billion for its fiscal first quarter on Wednesday and warned spending would rise this year,

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,

Its ascent punctuates a big turnaround from earlier this year, when analysts were less bullish on the company. Apple has become the third company to see its market capitalization top $4 trillion, underscoring its role as one of the leading publicly traded tech companies and making it the second-most valuable company in the world.