Microsoft reports $61.86bn revenue after investing billions into artificial intelligence
Microsoft (MSFT) released its fiscal third-quarter earnings on Thursday, surpassing analysts’ expectations on both the top and bottom lines, driven by the robust performance of its cloud computing division.
In a statement, Microsoft CEO Satya Nadella highlighted the transformative impact of the company’s AI services, such as Microsoft Copilot and Copilot stack, in driving improved business outcomes across various industries and roles.
Microsoft reported that its AI services contributed 7 percentage points to the growth of its Azure and other cloud services revenue, up from 6 points in the previous quarter and 3 points in the quarter before that. This marks an acceleration in the contribution of AI to Azure revenue since it was first disclosed in the fourth quarter of last year.
Microsoft reported earnings per share (EPS) of $2.94 on revenue of $61.9 billion, exceeding Wall Street estimates of $2.83 EPS on revenue of $60.88 billion. Microsoft’s commercial cloud revenue reached $35.1 billion, surpassing analysts’ estimates of $33.93 billion. Within segments, Productivity and Business Processes revenue totaled $19.57 billion, Intelligent Cloud revenue reached $26.71 billion, and More Personal Computing revenue amounted to $15.58 billion. These figures exceeded analysts’ expectations across the board. Shares of Microsoft surged nearly 4% in pre-market trading on Friday.
Year-to-date, Microsoft’s shares have risen more than 10%, trailing behind competitors like Google parent Alphabet and Amazon, which have seen gains of 15% and 22%, respectively. Over the past 12 months, Microsoft’s shares have climbed 32%, while Amazon’s have surged 67%, and Google’s have risen 47%. The competition among these tech giants revolves around offering comprehensive AI solutions to enterprise and consumer customers, involving heavy investments in third-party firms and internal team reorganizations.
Why Microsoft’s Future Looks Brighter Than Ever
Microsoft’s AI efforts received a significant boost with a five-year, $1.1 billion agreement with Coca-Cola to utilize Azure cloud services and AI technology, accelerating AI transformation across Coca-Cola and its bottlers worldwide. Microsoft has been introducing a slew of new AI features and services across its enterprise, productivity, and consumer platforms since debuting its revamped version of Bing and AI chatbot in February 2023.In March, Microsoft welcomed DeepMind AI and Inflection AI co-founder Mustafa Suleyman and other team members, with Suleyman appointed as CEO of the Microsoft AI division. Additionally, Microsoft announced a multiyear partnership with French AI startup Mistral in February, allowing it to offer Mistral’s models on its Azure platform.
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