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.

The company reported that it spent a higher-than-expected $34.9 billion in capital expenditures during its quarter.

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 365 and its Azure cloud computing platform were hit with DNS issues, similar to the recent AWS outage.

Microsoft's CEO, Satya Nadella, told investors that the company plans to double its data center footprint over the next two years.

Microsoft Corp. reported a steeper climb in spending than Wall Street expected, fueling anxieties about the high costs of providing AI infrastructure.