NLM Photonics, a Seattle-based chip materials startup and University of Washington spinout, announced two new investors: Pangaea Ventures and Diamond Edge Ventures, the investment arm of Mitsubishi Chemical Corp.

They joined as part of a funding round that totals $13 million, according to a Form D filed with the Securities and Exchange Commission. NLM has reported at least $26 million in funding since 2018, according to SEC filings.

The company offers a way to move more data without burning more power. Inside a data center, information travels between chips and servers as pulses of light. The part that puts the data onto the light beam, called a modulator, is normally made of silicon. It limits how much data a link can carry, and how much power that takes.

NLM’s technology, sold under the name Selerion, is an organic electro-optic material that goes on as a liquid and hardens in place on the chip, taking over the modulator’s job from the silicon underneath. The company says it does the work 10 to 15 times more efficiently.

Applications for the technology include fiber-optic networking equipment and the links between servers in AI data centers. NLM says it could also be used in quantum computing.

Five existing investors participated in the round, which the company described as a Series A2: Emerald Technology Ventures, Oregon Venture Fund, Idemitsu, Tokyo Ohka Kogyo and StoryHouse Ventures. Private investors and company employees also took part.

Pangaea Ventures, which has offices in Canada, the United States and Japan, backs startups built on advances in materials, chemistry and biology. It says it has invested in more than 40 companies over more than 20 years. David Weekes of Pangaea is joining NLM’s board, which already includes Frank Balas of Emerald.

Diamond Edge Ventures, led by president Curtis Schickner, has $200 million to invest through 2030. It backs companies in Mitsubishi Chemical’s core markets, including advanced materials, polymers and electronics, and its portfolio includes Boston Materials, DigiLens and Eridan.

Hamamatsu Photonics, which invested previously, is not part of this round but is still a shareholder, according to the company.

The company was incorporated in 2018 as Nonlinear Materials Corp. It licensed its patents from the University of Washington, building on 25 years of research there in the labs of chemists Larry Dalton and Bruce Robinson. Robinson is one of the company’s co-founders, as is Lewis Johnson, a longtime UW researcher who is chief technology officer.

Pack Ventures, the UW-affiliated venture fund, is an investor in NLM and is also listed among the advisors to its board.

GeekWire covered NLM’s launch in 2019, when the company was raising a $1.25 million seed round and running a small production lab on campus.

Brad Booth, who spent nine years at Microsoft and joined NLM’s board in 2023, took over as CEO in 2024 from co-founder Gerard Zytnicki, who is now a corporate advisor to the company. The company raised $1 million from Tokyo Ohka Kogyo and Hamamatsu in 2023.

Last year NLM said outside testing confirmed that a 1.6-terabit chip combining silicon with its materials ran at 224 gigabits per second on each of eight channels. It started sending samples of 1.6- and 3.2-terabit chips to customers in March.

NLM is not alone in trying to build a better modulator. Lightwave Logic, a publicly traded Colorado company also working with organic materials, named NLM among its smaller competitors in its annual report for 2024.

Some of the company’s rivals have raised a significant amount of funding. HyperLight, a Harvard spinout that uses a crystal called lithium niobate instead of an organic material, has raised $117 million, including $80 million in June led by MediaTek.

NLM has worked to get its materials onto other companies’ production lines. In March the company said the chips going out to customers were made at GlobalFoundries, and that it had built modulators using Tower Semiconductor’s high-volume silicon photonics process.

California-based Cowboy Space is leasing a 291,035-square-foot industrial facility in Kent, Wash., to support the production of hardware for its planned constellation of AI data center satellites, according to the company that arranged the lease.

“According to Newmark Research, the transaction is the largest industrial lease in the Puget Sound region year-to-date,” Newmark, the real estate broker for the deal, said in a news release. Newmark represented CenterPoint Properties, Cowboy’s new landlord.

The facility at 7650 S. 228th St. previously served as a Costco distribution and delivery center. “This building was originally designed for large-scale logistics users, but Cowboy Space recognized the opportunity to reimagine it as a highly specialized production facility,” said Taylor Hoff, a vice chairman at Newmark’s office in Bellevue, Wash.

Newmark said Cowboy Space plans to convert the facility into a manufacturing operation supporting space and rocket development. The operation is expected to add 300 jobs, Newmark said. Cowboy is currently listing 46 Kent-based positions in its careers database.

The city of Kent, which is about 20 miles south of Seattle, is one of the hotspots for space companies in the Pacific Northwest. Boeing’s Kent Space Center remains active more than 50 years after building NASA’s Apollo moon rovers. The city also hosts Jeff Bezos’ Blue Origin space venture and Stoke Space, which was founded by Blue Origin alumni.

Cowboy Space, previously known as Aetherflux, plans to send its own rockets into low Earth orbit starting as early as 2028, with the upper stages outfitted to serve as solar-powered orbital data centers. The Stampede constellation is one of several planned projects aimed at getting around the land, power and water constraints that have made ground-based AI data centers increasingly controversial.

“We are building what I call the last big clean-sheet launch vehicle in my lifetime, so it’s going to be a very big heavy-lift vehicle, and we’re working every day to bring it to reality,” Warren Lamont, Cowboy Space’s head of launch and propulsion, said this week in a LinkedIn video. Lamont, who previously worked for IonQ and Blue Origin, is one of the executives heading up Cowboy Space’s engineering hub in the Seattle area.

The company announced in May that it raised $275 million in a Series B funding round, in part to expand its production capability. Cowboy is collaborating with Nvidia to deploy the chip giant’s Nvidia Space-1 Vera Rubin Modules in orbit. And in July, it secured a deal to test its propulsion system at NASA’s Stennis Space Center in Mississippi.

“We’re really excited to get into first engine hot-fire next year,” Lamont said.

Cowboy Space’s potential competitors include SpaceX, which wants to launch up to a million AI-processing satellites; and Redmond, Wash.-based Starcloud, which is setting up a production facility in Woodinville, Wash., and seeking authorization for up to 88,000 data center satellites.

Update for 3:30 p.m. PT Sept. 13: Cowboy Space confirmed the opening of its Kent facility in a post to LinkedIn. “Kent will be our launch vehicle and satellite design hub, and we will be building our rocket engines and solar systems here too,” the company said:

A decade or two on the road will drain an EV battery’s range and hobble its acceleration. But while it peters out for daily commutes, that battery still has a lot of juice left.

A cohort of battery entrepreneurs is giving these units a second life, powering off-grid communities, industrial sites and energy-hungry data centers. Industry leaders — British Columbia’s Moment Energy and Redwood Materials in Nevada — are rapidly scaling up as the supply of aging batteries surges.

This summer, Moment moved into its 100,000-square-foot Megafactory 1 near Vancouver, converting a shell into its new HQ and manufacturing space in six weeks. It’s also building a Texas Gigafactory expected to open in January.

Redwood is likewise ramping up after unveiling the world’s largest used-EV battery system in June 2025: A 63-megawatt-hour solar and battery installation powering a Nevada data center run by AI infrastructure company Crusoe.

Absent reuse, these batteries end up in landfills or recycling shredders.

“Why recycle this battery prematurely when there’s over 95% life left?” asked Eddy Chiang, CEO and co-founder of Moment. When the batteries get recycled, some companies send the material to China for refinement, exporting valuable raw materials.

The market’s potential is massive. Chiang estimates that the used batteries available today could match Denver’s electricity use 20 times over — and 90 times over in four years.

The ‘Christmas light’ problem

So why pull an EV battery that still has 80% or more of its life left? Think Christmas lights, says Chiang.

Particularly with lights sold in the past, “if one light bulb burnt out, the whole string burns out,” he said. “And that’s what’s happening in the battery pack. The actual failure mode for EVs is actually due to a single cell failure, like that light bulb.”

EV battery packs contain hundreds or thousands of cells that are grouped into modules, which are housed in large metal shells affixed under the vehicle’s floorboard. The cells can be similar to the AA batteries in consumer electronics, while others are larger blocks or pouches.

When Moment receives used batteries, it first runs diagnostics to test their performance. Then it breaks down the packs into modules, and racks them in cooled shipping containers. Moment uses proprietary software to redirect energy away from weak cells to healthy ones to extend battery life.

The company’s largest storage system is called Luna, delivering up to 1 megawatt hour of energy, which is enough electricity to power roughly 49 Seattle households for 24 hours. It’s preparing to launch a new model, but keeping the details under wraps.

Moment customers range from God’s Pocket Resort, an eco-lodge on a tiny Canadian island where its system slashed the use of diesel generators, to Vancouver International Airport, which avoided up to $20 million in grid upgrades to power fast chargers for its EV fleet, Chiang said. “Instead, they bought a couple of our batteries.”

From recycling to reusing

Redwood Materials began nearly a decade ago as a battery recycler led by former Tesla executives. But in recent years, they recognized a missed opportunity.

“We had a group of people standing around watching our recycling operation, looking at these giant battery packs that we’re going to so much effort to disassemble, and just wondering, ‘Can we do more with these before we shred them?'” said Colin Campbell, Redwood’s chief technology officer.

Now 95% of the EV batteries Redwood receives are reused rather than recycled. And despite its Tesla roots, the startup accepts batteries from any automaker and has created a “universal translator” that manages battery packs with different voltages, power and chemistry.

Campbell touts the conversion of the EV devices to stationary storage as straightforward.

In its simplest terms, Redwood’s energy storage sites are “an electric vehicle parking lot with the wheels removed,” he said. “So it’s just literally the battery that was in the car. There’s lots of them arranged in a grid together and plugged in.”

That plug-and-play approach solved major headaches for Crusoe. By pairing repurposed EV batteries with solar power for its new AI data center in Nevada, Crusoe bypassed multi-year grid-connection delays, saved money and avoided emissions from diesel generators.

Scott Williams, vice president of energy at Crusoe, said the solution has worked well for his company, which builds data centers and offers its own AI cloud services.

“We’ve signaled to Redwood that we’re going to grow with them,” Williams said, including “multiple gigawatt hours paired with our modular units, which is super exciting.”

Industry headwinds

Despite the momentum, the sector faces headwinds. Communities have resisted large battery projects due to fire concerns, sparked by high-profile incidents like California’s Moss Landing fire.

The companies emphasize that EV batteries are built to survive high-speed crashes, making them inherently safer than standard stationary battery storage. The Moss Landing fire involved older, non-EV batteries in a very different setup than the startups are using. Additionally, Moment’s systems hold extensive UL safety certifications and Redwood has passed a UL fire-safety test.

Another industry hurdle is competition. Overbuilt recycling capacity — plus U.S. and European mandates requiring recycled content in new batteries — creates competition for used EV packs.

Yet from a climate perspective, repurposing is vital. Batteries are almost always “the most carbon-intensive component” in any electronic device, said Grayson Shor, executive director of the Pacific Northwest Battery Collaborative and co-founder of the startup Buckstop.

Repurposed EV systems can extend that initial carbon investment by providing clean power for 20 to 30 years and meet urgent energy demand.

“Everybody’s like, ‘Where are we going to get electricity?'” Campbell says. “And we have a really excellent option already here.”

Sources and references

Interviews:

• Eddy Chiang, CEO and co-founder at Moment Energy
• Colin Campbell, chief technology officer at Redwood Materials
• Scott Williams, vice president of energy at Crusoe
• Grayson Shor, executive director of the Pacific Northwest Battery Collaborative, and co-founder and chief product officer of Buckstop, a circular-economy startup focused on the recovery of minerals and other valuable materials

Additional sources:

• “Electric-Vehicle Battery Basics” (Car and Driver)
• “How long do EV batteries last” (Recurrent)
• God’s Pocket Resort eco-lodge

Starcloud says it has raised $250 million in new funding to support the creation of a constellation of data center satellites powered by Nvidia’s next-generation AI chips.

The Series A extension funding round was led by Manhattan West, with participation from existing investors including Benchmark, EQT, Soma, NFX and 776. Among the new investors joining for this round are Nvidia, Cisco Investments, Cedar Capital, Goanna Capital and Standard Capital.

Founded in 2024, Starcloud is headquartered in Redmond, Wash., and is building production lines for its Starcloud-3 spacecraft at a new 100,000-square-foot manufacturing facility in Woodinville, Wash. The newly announced round brings the startup’s total capital raised to $450 million, with a post-money valuation of $2.3 billion.

Nvidia’s participation in the funding round brings Starcloud’s collaboration with the computer-chip titan to a new level. In November 2025, Starcloud flew Nvidia’s H100 GPU to orbit for the first time. It used the chip to train a large language model called NanoGPT — marking a milestone in space-based AI data processing.

Starcloud plans to equip future satellites with Nvidia’s Space-1 Vera Rubin Module, which Nvidia says will deliver 25 times as much in-space compute capability as the H100. Starcloud’s satellites will serve as an early flight platform for the space-rated chips.

“This fresh capital empowers us to build the infrastructure to launch many more of Nvidia’s most advanced GPUs into space,” Starcloud co-founder and CEO Philip Johnston said today in a news release.

Starcloud says the new investment will fund the continued buildout of manufacturing capacity, engineering work in collaboration with Nvidia and the procurement of future launch slots. Manhattan West’s Lauren Selig will join Starcloud’s team as a board observer.

Starcloud has filed an application with the Federal Communications Commission to operate as many as 88,000 satellites as orbital data centers for AI and other applications. It’s not the only company targeting the market for orbital data centers. Most notably, SpaceX has filed its own plans to put up to a million data center satellites in space, for a project called Starmind.

The push to move AI infrastructure into space is driven by growing terrestrial bottlenecks surrounding land, power and water consumption — and by the political controversies those bottlenecks have sparked.

Five months after OpenAI cut the ribbon on its office in Bellevue, Wash., the building has become the target of a national campaign against AI expansion, which made its Seattle-area stop on Friday with balloons, whistles and rogue “AI agents” in hot pink vests.

In what one X user described as possibly “the most unserious protest of all time,” some members of the group entered the City Center Plaza lobby with a chorus of “Happy Rogue Day to OpenAI,” dancing around and generally coming off like members of a community acting troupe.

The “Happy Rogue Day” song was a reference to an incident last month, when two OpenAI models escaped a closed testing environment and reportedly carried out some 17,600 hacking actions on the open internet over four days, ultimately breaching the AI developer platform Hugging Face.

The New York Post called the Bellevue protest “cringeworthy,” but the very fact that it got national coverage was a win for the protesters, drawing attention to their concerns over data centers, energy use, and an AI race they say is accelerating beyond anyone’s control.

This might be the most unserious protest of all time pic.twitter.com/koP03RAhWw

— JJ (@jjtwofive) August 15, 2026

Organizers said the protest was part of “Dump Big Tech” actions taking place this month in more than 20 states, with much of the energy directed at data center expansion. Earlier in the week, 13 student protesters were arrested occupying OpenAI’s lobbying office in Washington, D.C.

We’ve contacted OpenAI for comment on the Bellevue protest.

The action was organized by the Oil & Gas Action Network, Troublemakers Community, Washington AI Resistance, Salish Sea Action Collective, and QuitGPT.

The Bellevue office is OpenAI’s largest outside its San Francisco headquarters, with about 250 employees in the region when it opened in March. It occupies two floors with the ability to add 10 more, under a lease covering nearly 300,000 square feet, room for as many as 1,400 people.

Bellevue has actively courted AI companies, with xAI, Crusoe, and others expanding downtown, and Mayor Mo Malakoutian calling OpenAI’s arrival a vote of confidence in the city.

This week on the GeekWire podcast: SpaceX reports its first quarter as a public company, and Elon Musk says Starlink could deliver a majority of the world’s internet within a decade, leveraging production facilities in Redmond. Musk also explains the company’s data center ambitions, calling terrestrial infrastructure a trivial problem next to reusable rockets. 

Plus: we bring two Washington tech universe posters into the studio, 17 years apart. The 2009 original turns up gems including Boeing’s unlikely connection to Classmates.com, the 1990s forerunner to Facebook. It also brings back memories of Teledesic, the Craig McCaw venture backed by Bill Gates that tried to beam internet from space decades before Starlink.

Finally, the GeekWire Trivia Challenge returns with a timely question about Google’s origins.

Related stories and links

SpaceX’s first earnings call as a public company

• SpaceX earnings: Elon Musk says Starlink could deliver most of the world’s internet within a decade
• Elon Musk’s Mars illusion — Dominic Gates on the gap between the Mars vision and the timeline
• Blue Origin’s New Glenn rocket explodes on pad during test; Jeff Bezos vows to rebuild
• Blue Origin’s rocket blowup hits NASA and Amazon Leo as well

Mapping Washington’s tech universe

• New map traces Washington state’s tech ‘universe’ to a few key hubs, and shows what’s at risk
• The latest Washington Tech Universe map from WTIA, and posters are available here
• Massive map shows how Seattle’s tech ecosystem evolved over the last 30 years — the 2015 edition
• The original 2009 Puget Sound Tech Universe map. (Thanks to Ken Myer for digging this up!)
• GeekWire’s Seattle engineering centers list

GeekWire Trivia

• The startup idea that convinced a UW computer science legend to leave Google after 27 years
• What a longtime Google AI leader told UW computer science students at their graduation

Subscribe to GeekWire in Apple Podcasts, Spotify, or wherever you listen.

Audio edited and produced by Curt Milton.

Microsoft and Amazon both saw their stocks surge again Monday, riding a post-earnings tech wave across the stock market that pushed Amazon past $3 trillion in value for the first time.

The gains follow earnings reports last week in which both companies’ cloud platforms exceeded expectations. Microsoft said Azure grew 43%, passing $100 billion in annual revenue for the first time. Amazon said AWS grew 37%, its fastest pace in 18 quarters.

Microsoft and Amazon are now the world’s fourth and fifth most valuable companies, respectively. The three ahead of them (Nvidia, Alphabet and Apple) are all headquartered in the Bay Area, although each has sizeable engineering centers in the Seattle region.

Amazon rose 4.6% in intraday trading to $284.15 as of publication time, after touching an all-time high of $287.20 earlier in the session, giving it a market value of $3.06 trillion.

Microsoft climbed 5.2% to $488.97, worth $3.63 trillion. Its rally began Thursday, when it added nearly $450 billion in market value, the largest one-day gain by any company on record.

The rallies came despite AI spending plans that have unsettled investors for much of the year. Microsoft went into earnings near a one-year low, after a $357 billion wipeout to start the year.

It’s all still coming at a huge cost. Microsoft spent a record $41 billion on capital projects last quarter and told investors to expect more than $50 billion in the current quarter. Amazon raised its 2026 forecast to about $220 billion from $200 billion, citing rising memory chip prices.

In one sign of the impact of the spending, Microsoft’s free cash flow fell 23% last quarter. Amazon’s free cash flow turned negative for the first time since 2023.

But cloud growth and other signs of demand for AI seem to have appeased investors for now.

Amazon CEO Andy Jassy told investors the spending reflects unmet demand: “Even at that amount, we will still not have enough capacity to meet all the demand we have in 2026, and I believe this dynamic will also be true in 2027 too. In fact, the demand we already have for 2028 is striking.”

The gains come as both companies operate with fewer people. Amazon confirmed 16,000 more corporate job cuts in January, bringing the total to 30,000 since October, along with more recent reductions in its robotics and artificial general intelligence groups.

Microsoft cut 4,800 jobs in July, revamping its salesforce and overhauling Xbox.

Sophia Space has secured a patent for a technology that could pave the way for solar-powered orbital data centers that passively radiate excess heat into space.

Developed in partnership with Caltech, Sophia’s architecture tackles a major hurdle in orbital computing: how to cool thousands of chips running artificial intelligence applications in space.

Traditional designs rely on satellite-wide radiator systems with heat pumps and circulating fluids. In contrast, Sophia plans to build flat, modular tiles equipped with four processors each. The tiles draw power from solar cells on their sunlit side, and shed heat into the cold vacuum of space from their dark side.

This approach avoids having to put a cooling system in the central bus of every satellite, said Leon Alkalai, Sophia Space’s co-founder, chairman and chief technology officer. “I think you will find in time that our approach is much more favorable when we scale to larger wattage systems, because bringing everything into a bus can only be done until a certain level, and then it becomes almost impossible to do,” he told GeekWire. “Our benefit is really scalability.”

An added benefit of the satellite design is that each tile is powered independently. “The connectivity between the tiles is with fiber optic connectors,” Alkalai said. “Only data is shared. No power, no thermal, no copper wires. It’s just fiber optic links.”

Alkalai and his team came up with a fitting acronym for the design of the modules: TILE, which stands for Thermal Integrated LEO Edge. (LEO stands for “low Earth orbit.”)

How it all began

Alkalai founded Sophia Space after he finished up a 32-year career at NASA’s Jet Propulsion Lab and transitioned to the space startup world in 2021. The company is headquartered in Pasadena, Calif., but also has corporate connections to Seattle. This week, Alkalai was one of the featured speakers for Seattle Tech Week.

The TILE approach to orbital electronics came out of a Caltech research project that initially focused on space solar power systems.

“That was before 2022, when ChatGPT was announced,” Alkalai said. “Once that happened, within a year, all hell broke loose in the data center world, saying we need a thousand times more energy to power AI — and our reason to exist just skyrocketed.”

Putting data centers in orbit would get around some of the problems associated with terrestrial data centers — for example, the mushrooming requirements for real estate and the huge drain on electrical grids. But the cooling issue has loomed as a key impediment for orbital computing.

Alkalai said the “eureka moment” came when he and his fellow researchers came up with a way to balance out the solar power absorbed by the front of the tile, the power requirements for the processing chips, and the heat radiating out the back. “We did the basic math and said, ‘Oh my God, this can work,'” he recalled.

The patent application for “Space-Based Data Centers” was filed in October 2024, and the patent was granted to Sophia Space and Caltech on July 14. In addition to Alkalai, six other members of the team are listed as inventors: John Brophy, Jonathan Sauder, Timothy McElrath and Douglas Sheldon at JPL; Sergio Pellegrino at Caltech; and Don Hunter, a JPL retiree.

In a news release, Brophy said the TILE architecture “was developed as part of JPL’s mission to address challenges of national significance by applying unique JPL talent.”

“This is an illustration of how JPL, Caltech and private industry can work together to rapidly develop solutions to difficult technical problems for the benefit of the nation,” he said.

Where it’s all going

Alkalai said his fellow inventors will share in the fruits of the patent. “All of them are involved in Sophia, and they have equity in the company,” he said. “And with Caltech, we’ve signed a contract to continue doing research with Sergio Pellegrino and his students. … We are continuing this effort with the original inventors. They are consulting and are equity holders of Sophia.”

The development timeline calls for Sophia to fly its first technology demonstrator next year. “We’ve announced that we are partnering with Apex satellites,” Alkalai said. “We’re using their Nova bus … and that will be the first-ever tech demo of a tile with four GPUs.”

Alkalai said Sophia Space plans to start selling TILE systems and related components to customers in 2028, and start testing the system’s capabilities with a constellation of four to six satellites in the 2029-2030 time frame.

“What that will do is demonstrate the end-to-end system,” he said. “Then, in the new decade, we can scale up to larger numbers in the constellation, larger numbers of tiles, and so on.”

Alkalai said obtaining the newly issued patent is part of Sophia’s plan to build up a strong portfolio of intellectual property.

“If anybody wants to license or use our TILE and use our scalable approach, we could turn that into a business,” he said. “Protecting your IP is not only to deny, it’s also to enable. And I see it more as the latter. Why would somebody fight it? They could license it, and we could make this applicable all over the world.”

Alkalai said the orbital data centers that are being planned by other companies — for example, SpaceX’s ambitious Starmind network and the satellite constellation envisioned by Redmond, Wash.-based Starcloud — don’t appear to be designed to take advantage of passive cooling and would thus raise no questions of infringement on Sophia Space’s patent. But he suspects that the TILE architecture will eventually become the standard for orbital data centers.

“I’ve been on this quest for five years, and I really feel very, very good about this particular topic, because I think it’s of benefit to humanity,” Alkalai said. “This is not just a money issue, or about benefits to me or my team. I just think this is a good direction for humanity as we evolve into a space economy.”

Microsoft’s Azure cloud business grew 43% last quarter, blowing past the company’s own forecast and surpassing $100 billion in annual revenue for the first time, providing fresh evidence of the potential for artificial intelligence to fuel new growth for the tech giant.

The company’s results for its fiscal fourth quarter also showed the price of that growth: capital spending hit a record $41 billion, largely to support the company’s AI buildout, and free cash flow sank 23% even as operating profits jumped 18%.

And in a new twist, Microsoft shares rose more than 5% in after-hours trading, in contrast with the recent pattern in which the company’s strong results were met with selloffs that pushed its stock near a one-year low.

Companywide results: Overall, Microsoft reported revenue of $90 billion for the quarter, up 18% from a year ago, and net income of $35.8 billion, up 31%. Analysts had expected $87.7 billion in revenue, a figure that was already at the top of Microsoft’s own guidance range.

Microsoft’s adjusted earnings of $4.74 per share topped the $4.24 that analysts expected, according to Yahoo Finance. That included a $3.2 billion gain on Microsoft’s investment in Anthropic, part of a 27-cent benefit from one-time items. Even excluding those items, the company said, it exceeded expectations across revenue, operating income and earnings per share.

Microsoft 365 Copilot surpassed 30 million paid seats, up from 20 million last quarter. That’s still less than 7% of the roughly 450 million commercial Microsoft 365 seats, a gap that has drawn investor skepticism all year.

Microsoft’s backlog grew 84% to $678 billion. Known as remaining performance obligation, or RPO, it’s the value of contracts that customers have signed but that Microsoft hasn’t delivered on yet, basically the business Microsoft has already locked in but has yet to record as revenue.

Investors have been worried for a year that too much of it came from a single customer, OpenAI. Microsoft said all of the $51 billion increase over the prior quarter came from customers other than the big AI model companies. Setting OpenAI aside, the backlog still grew 25%.

Windows OEM and Devices revenue declined 7%, hurt by slower PC demand and a tough comparison with last year’s Windows 10 upgrade wave. The decline would have been steeper, but PC makers built more machines to get ahead of rising memory prices, and Microsoft collects its Windows fee when a PC is built rather than when it’s sold.

Xbox content and services revenue fell 10% and Xbox hardware fell 13%. Microsoft also wrote down the value of unspecified Xbox assets. The company grouped that charge with severance costs and lower-than-expected costs from its retirement program — a net $500 million hit to operating income — and declined to say how much of it was Xbox or what was written down.

Amazon reports quarterly earnings Thursday afternoon, facing the same test as every other big tech company right now: whether it’s generating enough business to justify its massive AI spending.

Wall Street expects revenue of about $196.4 billion, up 17% from a year ago, and earnings of $1.82 per share. That’s essentially the midpoint of Amazon’s own forecast for the second quarter.

Part of that growth is due to the calendar. Prime Day ran June 23-26 this year, during the second quarter in the U.S. and most large markets. Last year it ran July 8-11, in the third quarter. That gives Amazon’s retail numbers a boost this time that the year-ago quarter didn’t have.

Another factor is the cloud. AWS grew revenue 28% last quarter, its fastest rate in nearly four years, and analysts expect the acceleration to continue with revenue of roughly $40.5 billion for the second quarter, up 31%, according to Zacks Consensus Estimates.

The company plans a record $200 billion in capital expenditures this year, nearly all of it for data centers, servers and chips to support increased capacity for training and running AI models.

Amazon is making those investments based in part on demand from big AI companies including OpenAI and Anthropic, which have signed commitments to AWS worth $138 billion and more than $100 billion, respectively, for the coming years.

“We’re not investing approximately $200 billion in capex in 2026 on a hunch,” CEO Andy Jassy wrote in his April shareholder letter.

In the meantime, the spending is absorbing nearly all of the cash from Amazon’s operations. Free cash flow fell to $1.2 billion over the past 12 months, from $25.9 billion a year earlier.

Investors seem to be losing patience with that tradeoff overall. Google parent Alphabet beat expectations last week and its stock fell anyway, after raising its own capital spending forecast to as much as $205 billion for the year. Microsoft reports earnings Wednesday afternoon.

One difference for Amazon is its custom chip business — Graviton, Trainium and Nitro — which passed a $20 billion annual revenue run rate last quarter. Jeff Bezos said this week that it’s becoming a fourth pillar of the company, alongside Marketplace, Prime and AWS.

The company is overhauling its approach to AI model development. Business Insider reported this week that Amazon is winding down most of its in-house Nova models and concentrating engineers on a new frontier model effort, with a new flagship model expected at re:Invent this fall.

Amazon cut jobs in its AGI organization last week and confirmed that it’s closing its San Francisco AI site, while saying its frontier model research would continue.

At the same time, AWS is spending to help other companies deploy AI, committing $1 billion at the end of June to embed its own engineers with enterprise customers building agentic systems, following similar moves by OpenAI and Anthropic.

Check back with GeekWire for coverage on Thursday afternoon.