Oct 29 (Reuters) - Microsoft ( MSFT ) reported blockbuster growth

in its cloud-computing business on Wednesday that pushed its

quarterly revenue past Wall Street estimates, showing businesses

are still splurging on artificial intelligence services despite

fears of a bubble.

The results highlight the growing returns from Microsoft's ( MSFT )

massive AI investments. They come as a web of circular deals,

soaring valuations and limited evidence of AI productivity gains

have raised doubts about how long the boom will hold.

Microsoft ( MSFT ) said the Azure cloud business, its key

AI unit, grew 40% in the July-September period - its fiscal

first quarter - outpacing Visible Alpha estimates of about

38.4%.

Total revenue rose 18% to $77.7 billion, beating

expectations of $75.33 billion, according to data compiled by

LSEG.

That marked the tech company's second major win this week,

following a revised deal with OpenAI that gave it a 27% stake

worth about $135 billion, as well as a cut of sales and access

to intellectual property, clearing up uncertainty about the

collaboration with the company synonymous with the AI boom.

The partnership, which gives Microsoft ( MSFT ) exclusive access to

the models behind ChatGPT, has been key to Azure's rapid growth

in recent quarters and strengthened its challenge to top cloud

provider Amazon.com ( AMZN ). It is also crucial to Microsoft's ( MSFT )

other AI services, such as 365 Copilot for businesses.

That AI push has turned Microsoft ( MSFT ) into the world's

second-most valuable firm with a $4 trillion market value,

trailing only the $5 trillion chip company Nvidia. The stock, up

nearly 30% this year, is among the best performers in the

"Magnificent 7."

Some analysts have praised Microsoft's ( MSFT ) decision in recent

months to let some OpenAI contracts go to Oracle, saying it

shows discipline in steering limited AI capacity toward more

profitable enterprise customers. The move is part of a broader

strategy to lessen its dependence on OpenAI by building its own

models and partnering with other AI firms, including Anthropic.

Still, capacity limits have hampered Microsoft's ( MSFT ) ability to

fully cash in on AI. The company and other major cloud providers

are expected to spend about $400 billion on data centers and AI

chips this year, with executives and analysts saying such

spending is necessary to harness the technology's potential.