Microsoft's earnings gave Wall Street just what it wanted.

For its fiscal first-quarter, Microsoft reported adjusted earnings of $4.89 per share on revenue of $92.3 billion. That beat analyst expectations for earnings of $4.71 per share on revenue of $90.6 billion.

Microsoft stock was up 4.1% in after-hours trading.

Perhaps more importantly, it spent less to drive those results. The company reported capital expenditures of $45.2 billion in the quarter -- higher than the $34.9 billion it spent a year ago -- but lower than the $51 billion analysts were expecting.

The lower-than-expected capital expenditures will likely be seen as a disappointment for other AI players. Chip stocks were down in late trading Wednesday.

Heavy spending has eaten away at free cash flow, which was $18.6 billion in the quarter. That's down from $25.7 billion in the prior year, but is higher than the $7.99 billion Wall Street expected. It still stands out compared to fellow cloud giant Alphabet, which reported negative free cash flow on Wednesday night.

Microsoft Azure cloud segment saw revenue growth of 48%, beating expectations of 44.3%.

Wall Street is tracking the returns on AI investments partly through results in the cloud. Microsoft makes money from Azure by renting out cloud computing power, storage, and other AI infrastructure to clients.

Earlier this week Microsoft said it was offering voluntary exit offers to 60,000 employees as the company looks to bring down costs amid this hefty spending.

Microsoft's earnings call is set to begin at 5:30 p.m. ET, when management is expected provide forward looking guidance. Capex guidance, free cash flow, and revenue forecasts could all impact the stock following the strong earnings report.