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.

Microsoft has reported an 18% increase in quarterly sales, reaching $77.7 billion, surpassing Wall Street expectations

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'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.

Microsoft CEO Satya Nadella faced pushback even from the company’s cofounder and original CEO Bill Gates, he recalled during an interview on tech-focused YouTube channel TPBN. “Remember this was a nonprofit, and I think Bill [Gates] even said, ‘Yeah, you’re going to burn this billion dollars,'” Nadella said.

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,

Microsoft services including Outlook, Minecraft and Xbox Cloud Gaming experienced widespread outages Tuesday, disrupting access for millions of users worldwide. The company said it was investigating the cause of the outage, which began early in the day and affected sign-ins and online gameplay across multiple platforms.

On Wednesday, the company reported spending a larger-than-expected $34.9 billion on new projects in the three months through Sept. 30 as it races to build data centers that provide computing power to fuel the A.I. boom, a 74 percent increase from a year earlier.

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,