“We expect capital expenditures to increase on a sequential basis, given our cloud and AI demand signals.”

In context

“l revenue and segment level revenue growth by less than 1 point. We expect FX to have no meaningful impact to COGS or operating expense growth. Our outlook has many of the trends we saw in Q1 continue through Q2. Customer demand for our differentiated solutions should drive another quarter of strong growth. In commercial bookings, we expect strong growth on a growing expiry base driven by increased long-term commitments to our platform and strong execution across core annuity sales motions. As a reminder, larger long-term Azure contracts, which are more unpredictable in their timing, can drive increased quarterly volatility in our bookings growth rate. Microsoft Cloud gross margin percentage should be roughly 70%, down year-over-year, driven by the impact of scaling our AI infrastructure. We expect capital expenditures to increase on a sequential basis, given our cloud and AI demand signals. As I said last quarter, we will stay aligned and, if needed, adjust to the demand signals we see. As a reminder, there can be quarterly spend variability from cloud infrastructure build-outs and the timing of delivery of finance leases. Next, segment guidance, starting with Productivity and Business Processes. We are the market leader when it comes to knowledge-based Copilots and agents in the enterprise space, and we are focused on continuing to gain share across our productivity solutions. Therefore, we expect revenue in Productivity and Business Processes to grow between 10% and 11% in constant currency or $28.7 billion to $29 billion. M365 commercial cloud revenue growth should be approximately 14% in constant currency with moderating seat growth across customer segments and ARPU grow”