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Resiliency in demand for cloud computing and growing excitement about artificial intelligence led to record quarterly revenue for Microsoft in the final three months of 2023.
Revenue from Microsoft’s high-profile cloud division, which includes its Azure cloud computing platform and is the company’s biggest revenue driver, rose 20% to $25.9 billion, beating analysts’ expectations of $25.3 billion. , the sales growth rate of the division reached 30%.
Total revenue rose 18% to $62 billion, beating expectations of $61.1 billion. Earnings per share were $2.93, well above analysts’ expectations of $2.77.
Investors are watching for signs that big investments in generative AI will boost revenues and profits at Microsoft and its Big Tech competitors. The company has catapulted into the center of the generative AI race thanks to its deal with his OpenAI startup for the chatbot ChatGPT. The company has pledged up to $13 billion for this.
This investment has given the world’s second-largest cloud services vendor an early lead in the race to develop and deploy generative AI.
Excitement about rapidly developing technology has fueled a rally in Microsoft’s stock price, which has climbed more than 60% in the past 12 months. With a market capitalization of more than $3 trillion, it has overtaken Apple as the world’s most valuable company, but its shares fell nearly 2% in after-hours trading.
“We’ve moved from talking about AI to applying AI at scale,” Microsoft CEO Satya Nadella said on Tuesday. “By bringing AI to every layer of our technology stack, we are winning new customers and driving new benefits and productivity improvements across all sectors.”
Demand for Microsoft’s AI services drove Azure cloud platform revenue up 6 percentage points in the quarter. This accelerated from an increase in sales of about 3 percentage points over the past three months.
Brett Iversen, vice president of investor relations, said Microsoft is increasing its AI infrastructure capabilities by investing in areas such as data centers and servers, but the company is increasing its AI infrastructure capabilities by investing in areas such as data centers and servers, but the company is also increasing its AI infrastructure capabilities by investing in areas such as data centers and servers. He said profits were not yet under pressure thanks to “cost control”. region.
Analysts are closely monitoring how many customers are using Microsoft 365 Copilot, a generative AI assistant integrated into the company’s suite of productivity apps. In January, the company made the tool available to individuals and small businesses for $30 per user per month.
Microsoft did not disclose revenue or user numbers for Microsoft 365 Copilot on Tuesday, but Iversen said the company is “excited by the early customer interest and demand.”
Microsoft’s $75 billion acquisition of Activision Blizzard contributed 4 percentage points to the 18% revenue increase recorded in the quarter.
