Microsoft’s Cloud and Windows services helped it beat Wall Street forecasts of revenue for the second quarter.
Analysts had estimated that revenue would be $61.12 billion, but it rose 18% to $62 billion.
Microsoft’s Intelligent Cloud division, which includes the Azure cloud computing platform, which competes with Amazon AWS, and Alphabet’s Google Cloud grew revenue by 20% to $25,9 billion. Microsoft doesn’t disclose the dollar amount of Azure sales, but they increased by 30%.
Microsoft’s market value is still $3.04 trillion despite the fact that its shares fell by $3.29 or 0.8 percent to $404.76 at late trading. This is higher than Apple’s valuation of $2.91 trillion.
Microsoft Azure and Office revenue will be closely watched by investors to see how much money the company invests in data centres to achieve generative AI. The Washington-based company, founded in 1975 by Bill Gates, Paul Allen, and others, has pledged to invest $10 billion into OpenAI, ChatGPT’s maker.
Microsoft is also the owner of the Windows operating system and Xbox. Last year, it bought Activision Blizzard for $69 billion. Microsoft announced last week that would be laying off 1,900 employees from Activision Blizzard, Xbox and Activision Blizzard, which represents about 8% of the entire Microsoft gaming division.
The technology company launched its main AI tool over the last three months — a $30 per month “Copilot” that allows users to create presentations, draft emails and collect meeting highlights. Early sales were reflected in the commercial sales of Microsoft Office software where revenues grew 17 percent.
Satya Nadella is the Chairman and Chief Executive of Microsoft. He said: “With Copilot we make the age of AI a reality for people and business everywhere.”
Microsoft’s More Personal Computing division, which includes the Windows operating system and its gaming business, saw sales increase by 19 percent to $16,9 billion, thanks in part to Activision Blizzard. Analysts expected growth of $15.8 billion.
Microsoft’s productivity division, which includes the LinkedIn social network and Office sales, has reported sales growth of 13 percent to $19.2 Billion, exceeding estimates by just a few cents.
Keith Weiss of Morgan Stanley said that “Gen AI is the number one priority for [chief Information Officers] and Microsoft has a unique position, as most CIOs expect to use a Microsoft AI in the next year.”
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