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Jan 29, 2026
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Supported by
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Happy Thursday! Microsoft's revenue backlog surges thanks to OpenAI's commitment to spend $250 billion on Azure. Tesla agrees to invest $2 billion in xAI. Meta Platforms forecasts a 73% jump in capex this year.
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Microsoft revenue grew 17% to $81.3 billion in the fourth quarter of 2025, a slightly lower rate of year-over-year growth than in the previous quarter. But Microsoft said it had $625 billion in remaining performance obligations as of the end of December, also known as a revenue backlog, up from $392 billion in the September quarter, implying it has plenty of revenue growth ahead. The company also disclosed it had 15 million paying subscribers of 365 Copilot, the suite of AI features for Office apps such as Excel and Word. Revenue from Azure and other cloud services grew 39% in the fourth quarter, compared to 40% growth in the quarter prior. Microsoft doesn’t break out Azure revenue in dollars. The company’s shares fell 4% in after-hours trading. The revenue backlog rise reflects OpenAI’s recent commitment to
spend $250 billion on Microsoft’s Azure cloud over an unspecified period, which the companies announced in October. Microsoft said 45% of its remaining performance obligations came from OpenAI, or $281.2 billion, while the rest came from other customers’ bookings, including Anthropic. Microsoft said it will take 2.5 years, on average, for that backlog to turn into revenue. Microsoft has been pouring money into new data centers and servers equipped with Nvidia chips in order to meet demand from OpenAI, Anthropic, and other AI customers. The company’s capital expenditures in the December quarter were $37.5 billion, up 66% compared to last year, with two thirds of that spending going towards short-lived assets like chips. Free cash flow for the December quarter was $5.9 billion, down 9% from a year ago, which the company said was due to rising capital expenditures. Microsoft for the first time disclosed the number of paying subscribers of Office 365 Copilot software, which uses models from OpenAI and Anthropic to power AI features in its Office apps. Microsoft said the 15 million figure only includes subscribers who pay a monthly rate per seat, which starts at $30 per month. That implies the software is on track to generate billions of dollars in annual revenue, though many companies receive discounts when buying subscriptions in bulk. By comparison, OpenAI’s ChatGPT had 35 million paying users as of last July. Microsoft also reported earnings per share of $5.16,
which were much higher than usual because OpenAI completed its restructuring in October and granted Microsoft a 27% stake in the company for the first time. With the restructuring, Microsoft now reports gains and losses on its OpenAI stake after previously reporting a share of OpenAI’s operating losses. For consistency, Microsoft also reported non-GAAP earnings per share of $4.14 that excluded accounting for its OpenAI stake.
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Tesla has agreed to invest $2 billion in xAI, the electric automaker said on Wednesday, further deepening ties between the two Elon Musk-led companies. Tesla disclosed the investment alongside its fourth-quarter 2025 financial results, which showed the company’s sales and profits are continuing to decline. Total revenues fell 3% year-over-year to $24.9 billion, while net income fell 61% to $840 million. Tesla had its second year in a row of falling auto sales in 2025 due to pressures including the end of electric vehicle subsidies in the U.S., increased competition from Chinese automakers globally and backlash to Musk’s political activities. Tesla shares were up about 2% in after-hours trading. Still, Musk has sought to turn attention toward newer initiatives like the Optimus humanoid robot and Tesla’s Robotaxi services. After blowing through deadlines Musk had set for both projects in
2025, Tesla said Wednesday it will expand Robotaxi to seven additional U.S. cities by the end of June and unveil a new version of the Optimus robot by the end of March.
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Meta Platforms on Wednesday reported fourth-quarter revenue of $59.8 billion, up 24% from a year earlier, exceeding its own forecasts of $56 billion to $59 billion. The company also outlined ambitious spending plans for 2026, forecasting capital expenditures of $115 billion to $135 billion, up roughly 73% from $72 billion in 2025. The increase is being driven by investments in artificial intelligence initiatives, including on chips and servers. The parent company of Facebook, Instagram and WhatsApp in October also forecasted total expenses in 2025 would rise roughly 40% to between $162 billion and $169 billion, with the bulk of growth coming from infrastructure costs and employee compensation for technical talent. In the fourth quarter, Meta said operating expenses rose 40%, reducing its profit margin by seven percentage points to 41%. Meta expects first-quarter 2026 revenue to be between $53.5 billion and $56.5 billion. Despite the spending surge, the company anticipates operating income for 2026 to exceed 2025 levels. Meta shares were trading up 10% in after-hours trading, a sign investors were expecting the higher capex projections and were focused on Meta’s strong revenue growth.
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Amazon announced on Wednesday that it was laying off 16,000 employees. The layoffs follow earlier layoffs in October, when Amazon said it was laying off approximately 14,000 corporate employees. Amazon said the latest layoffs continue on efforts to reduce layers and remove bureaucracy and that not all teams had accomplished that work in the October layoffs. Amazon said it would still hire in certain strategic areas. Beth Galetti, Amazon’s SVP of people experience and technology said in a note to employees shared as a press release that the company does not plan to continue making large-scale layoffs every few months.
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OpenAI is planning to use eyeball-scanning orbs or Apple’s Face ID to make sure the users of its planned social media app are humans, not computers, according to Forbes. The orb is an iris scanner produced by Tools for Humanity, a company co-founded by OpenAI CEO Sam Altman. Verifying the identity of people online has become increasingly difficult in recent years, since language models can produce text that is indistinguishable from a person’s, and AI can increasingly generate realistic deepfake images and videos of people. OpenAI already has a social media app for AI video generation, Sora. Fewer than 10 people are currently working on developing OpenAI’s new social media app, according to Forbes.
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