Microsoft reported better-than-expected earnings on Wednesday fueled by growth in its Azure cloud business, as five of the “Magnificent Seven” tech megacaps roll out quarterly earnings this week.

“AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process,” the company’s CEO, Satya Nadella, said in a press release. On an earnings call, Nadella said Microsoft’s AI business was “on track to surpass an annual run-rate of $10bn next quarter, which will make it the fastest growing business in our history to reach this milestone”.

All eyes were on Azure, Microsoft’s fastest-growing division, which has received billions of dollars of investment as the company focuses attention on artificial intelligence. Revenue from the division increased by 22%, according to a press release. A day earlier, Google’s parent, Alphabet, reported that its cloud business grew nearly 35% from a year earlier to $11.35bn, beating analyst estimates.

Nadella said Azure now had 39,000 customers, up 80% year-over-year. The company now had AI data centers in over 60 regions around the world and Azure-OpenAI usage had more than doubled over the past six months, he added.

Shares rose in after-hours trading. The company reported $3.30 earnings per share, against an anticipated $3.10 per share, on revenue of $65.59bn, against an anticipated $64.51bn.

As it has invested in AI, Microsoft’s financial expenditures have grown significantly. On Wednesday, its finance leases for data centers – essentially loans to pay for new assets over time – are over $108bn for leases that haven’t started yet.

Growing in parallel to its ballooning investments, Microsoft’s demand for electricity has shot up in recent years. The company is looking to restart Three Mile Island, the nuclear power plant in Pennsylvania famous for a partial meltdown in one of its reactors in 1979, as part of a project to power the tech giant’s enormous fleet of data centers. Three Mile Island produced power until 2019, when it was shut down. Under the deal, Microsoft plans to purchase the plant’s entire output of electricity over the next 20 years.

But investors are growing wary of big tech’s vast AI bet and hoping to receive a clearer picture of when the bet will begin to pay off. Between them, the seven companies – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla – represent $12tn in market capital and a whopping one-fifth of the S&P 500, but the group has trailed the market for the past three months and have collectively fallen 3.5% in value since early July.

The Wedbush analyst Dan Ives said in a note to investors that this was a “gut-check quarter” for Microsoft and Azure amid increasing competition in the AI ecosystem.

“Our checks for Microsoft have been solid this quarter as we continue to believe Redmond is in the driver’s seat and accelerating cloud deal flow for Azure with strong momentum into 2025 and beyond,” Ives wrote, referring to the location of Microsoft’s headquarters in Washington state. “We maintain our ‘outperform’ rating.”