Microsoft's earnings disappoint on key AI metrics

By the numbers: The company's Intelligent Cloud segment, which includes the Azure public cloud, generated $28.5 billion in the quarter, up 19% — but disappointing investors.

• Shares fell as much as 7.8% Tuesday after the closing bell.
• A ripple effect was felt among other names in the Magnificent Seven, with Alphabet, Meta and Apple shares also slipping in after-hours trading.

Meanwhile, Microsoft continued to spend more itself, largely on AI-related initiatives.

• It spent $19 billion on total capex in the quarter, up 78% from a year ago and 36% from the last quarter.
• Alphabet (about $12 billion last quarter), Meta (reporting tomorrow), and Apple and Amazon (reporting Thursday) are also making huge investments in AI — and there's already some skepticism about whether they'll ever get the necessary levels of revenue to justify it, Axios' Kia Kokalitcheva writes.

The intrigue: Microsoft's Azure cloud service suffered an outage Tuesday, which the company attributed to an "unexpected usage spike."