Microsoft Corp. is still suffering from a computing capacity crunch despite massive spending on data centers, a scenario that weighed on the company’s closely watched Azure cloud unit.

The company is seeing more demand for its cloud computing and AI services than it can keep up with, a challenge that is supercharging profits.

Microsoft has pulled this off while relaxing its grip on Open AI by, for instance, letting it use alternative sources of computing power so long as it asks first. On October 28th Microsoft loosened the setup once again,

On Wednesday, the company reported spending a larger-than-expected $34.9 billion on new projects in the three months through Sept. 30 as it races to build data centers that provide computing power to fuel the A.I. boom, a 74 percent increase from a year earlier.

Microsoft's recent cloud-computing performance reflects that the company has been picking up market share at the expense of hyperscale rivals, according to Cantor Fitzgerald analyst Thomas Blakey. That's mainly driven by the company's artificial-intelligence advantages,

Microsoft (NASDAQ:MSFT) delivered first-quarter results that exceeded expectations, driven by powerful growth in its cloud and artificial intelligence businesses, but shares slipped over 2% in premarket trading Thursday as investors reacted to the company’s plans to ramp up spending on AI infrastructure.

An outage on Microsoft's Azure cloud services Wednesday morning disrupted operations for customers worldwide including Alaska Airlines, Xbox users and 365 subscribers.