Microsoft reported fiscal first-quarter revenue and profits ahead of analysts’ expectations on Wednesday, with Azure revenue growth climbing to 40%.

The earnings report came as the company continued to deal with the lingering effects of a widespread cloud outage that started earlier in the day.

The company’s capital expenditures reached a record $34.9 billion — reflecting its long-term buildout of cloud infrastructure to meet demand for artificial intelligence. That was up from $24.2 billion in Q4. Microsoft had projected capital spending of more than $30 billion for Q1.

Along with that unprecedented buildout, Microsoft sought to address investor concerns about a potential AI bubble, by highlighting its commercial remaining performance obligation (RPO), a measure of future contracted revenue. That backlog grew 51% year-over-year to $392 billion.

The company also disclosed for the first time that this RPO has a weighted average duration of roughly two years, a move intended to show investors that its record capital spending is supported by strong, long-term customer demand.

Revenue was $77.7 billion for the quarter ended Sept. 30, Microsoft’s first quarter of fiscal 2026. That was up 18%, and compared with average analyst expectations of $75.39 billion. The company said the result was driven by strong demand for cloud and AI services.

Profits were $27.7 billion, or $3.72 per share, beating expectations of $3.66 per share.

Earlier Wednesday, an Azure cloud services outage disrupted operations for customers worldwide including Alaska Airlines, Xbox users and Microsoft 365 subscribers. Microsoft reported as of early afternoon that it was rolling back the faulty configuration and that customers should see improvements.

Microsoft stock was down by about 3% in after-hours trading. The company’s market value reached $4 trillion after the announcement of its new OpenAI deal on Tuesday morning.

Amazon confirmed Tuesday that it is cutting about 14,000 corporate jobs, citing a need to reduce bureaucracy and become more efficient in the new era of artificial intelligence.

In a message to employees, posted on the company’s website, Amazon human resources chief Beth Galetti signaled that additional cutbacks are expected to take place into 2026, while indicating that the company will also continue to hire in key strategic areas.

Reuters reported Monday that the number of layoffs could ultimately total as many as 30,000 people, which is still a possibility as the cutbacks continue into next year. At that scale, the overall number of job cuts could eventually be the largest in Amazon’s history, exceeding the 27,000 positions that the company eliminated in 2023 across multiple rounds of layoffs.

“This generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before,” wrote Galetti, senior vice president of People Experience and Technology.

The goal is “to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business,” she explained.

Galetti wrote that the company is “shifting resources to ensure we’re investing in our biggest bets and what matters most to our customers’ current and future needs” — indicating that layoff decisions are based whether teams and roles align with the company’s direction.

Amazon’s corporate workforce numbered around 350,000 people in early 2023, the last time the company provided a public number. At that scale, the initial reduction of 14,000 represents about 4% of Amazon’s corporate workforce. However, the number is a much smaller fraction of its overall workforce of 1.55 million people, which includes workers in its warehouses.

Cuts are expected across multiple regions and countries, but they are likely to hit hard in the Seattle region, home to the company’s first headquarters and its largest corporate workforce. The region has already felt the impact of major layoffs by Microsoft and others, as companies adjust to the uncertain economy and accelerate investments in AI-driven automation.

Many displaced tech workers here have found job searches slower and more competitive than in previous cycles in which the tech sector was more insulated than other industries.

The cuts at Amazon are the latest pullback after a pandemic-era hiring spree. They come two days before the company’s third quarter earnings report. Amazon and other cloud giants have been pouring billions into capital expenses to boost AI capacity. Cutting jobs is one way of showing operating-expense discipline to Wall Street.

In a memo to employees in June, Amazon CEO Andy Jassy wrote that he expected Amazon’s total corporate workforce to get smaller over time as a result of efficiency gains from AI.

Jassy took over as Amazon CEO from founder Jeff Bezos in mid-2021. In recent years he has been pushing to reduce management layers and eliminate bureaucracy inside the company, saying he wants Amazon to operate like the “world’s largest startup.” 

Bloomberg News reported this week that Jassy has told colleagues that parts of the company remain “unwieldy” despite the 2023 layoffs and other efforts to streamline operations. 

As part of its report, Reuters cited sources saying the magnitude of the cuts is also a result of Amazon’s strict return-to-office policy failing to cause enough employees to quit voluntarily. Amazon brought workers back five days a week earlier this year.

Impacted teams and people will be notified of the layoffs today, Galetti wrote.

Amazon is offering most impacted employees 90 days to find a new role internally, though the timing may vary based on local laws, according to the message. Those who do not find a new position at Amazon or choose to leave will be offered severance pay, outplacement services, health insurance benefits, and other forms of support.