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Microsoft (MSFT.O) achieved growth in cloud business revenue in the third quarter of fiscal year 2026, while expenses increased less than expected. Microsoft's capital expenditures in the third quarter of fiscal year 2026 increased by 49% to $31.9 billion, lower than the previous estimate of $34.9 billion. Total capital expenditures for the second quarter were $37.5 billion. Revenue from the Azure cloud computing division grew as expected by 40% in the quarter, faster than the previous three months' 39% growth rate. This performance may help alleviate market concerns: slow promotion of Microsoft's enterprise assistant Copilot365 and excessive reliance on OpenAI may have weakened Microsoft's early lead in the AI competition. Furthermore, this also helps prove that data center spending is reasonablealthough this spending has put pressure on cash flow, major cloud service providers are expected to invest more than $600 billion in AI infrastructure this year.