(Reuters) -Microsoft ( MSFT ) beat Wall Street estimates for first-quarter revenue and profit on Wednesday as efforts to build data-center capacity and AI-driven demand boosted its cloud business.

Shares of the Redmond, Washington-based company rose 1.3% in trading after market hours. 

"AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process," said Satya Nadella, Microsoft's ( MSFT ) chairman and CEO. "We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage."

 The quarterly earnings are Microsoft's ( MSFT ) first since it restructured the way it reports its businesses to align them more closely with how they are managed. That move has, however, made it harder to estimate the quarter's performance.

Azure revenue grew 33%, compared with Visible Alpha estimates for a 32% increase.

Earnings per share stood at $3.30, compared with analysts' average estimate of $3.10, according to LSEG data. 

Revenue rose 16% to $65.6 billion in the fiscal first quarter ended September, compared with analysts' average estimate of $64.5 billion, according to LSEG. 

Microsoft ( MSFT ) has been the worst performer among Big Tech names this year, having gained just over 15%, while Meta has surged 68% and Amazon climbed 28%.

Seen as the leader among Big Tech peers in the AI race, thanks to its early investment in ChatGPT maker OpenAI, Microsoft ( MSFT ) has ramped up AI services across its product offerings, helping attract more customers. 

The company has said that Azure's market share gains were being driven by AI, as it loaded the cloud computing platform with AI features and models - including OpenAI's newest o1 models, capable of answering challenging math, science and coding problems. 

The upgrade has also helped increase average spending per customer. 

Microsoft's ( MSFT ) rival Google has also benefited from AI growth. On Tuesday, Alphabet said AI helped drive a 35% surge in its cloud business. Its shares closed up over 2.8% on Wednesday, but fell 0.8% in after-hours trading.

Microsoft ( MSFT ) has been pouring billions into building out its AI infrastructure and expanding its data-center footprint to ease capacity constraints that have hampered its ability to meet the surge in cloud-computing demand.

The hefty investments have pushed up the company's capital spending in recent quarters, raising concerns among some investors. The company will spend over $80 billion this fiscal year, which began in July, according to analyst estimates from Visible Alpha. That is an increase of more than $30 billion from its last fiscal year.

For the quarter, Microsoft ( MSFT ) said capital expenditures rose 5.3% to $20 billion, compared with $19 billion in the previous quarter. That was higher than Visible Alpha estimates of $19.23 billion. 

(Reporting by Deborah Sophia in Bengaluru and Anna Tong in San Francisco; Editing by Anil D'Silva and Rod Nickel)