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.

Meta and Microsoft said they planned to spend even more on AI in 2026, and fears of a bubble keep mounting.

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.

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.

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.

Humans are going to start spending more time in the specification and creative process and delegate the actual calories they spend to GPUs.”

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,