Microsoft Profit Soars on AI and Cloud-Computing Investments
Microsoft Corp. reported a 33% increase in profit for the October-December quarter, driven by its investments in artificial intelligence technology.
Microsoft's Profit Soars on AI Investments
Microsoft Corp. announced that its profit for the October-December quarter has surged 33% thanks to its significant investments in artificial intelligence (AI) technology. The company revealed that the growth in its cloud-computing unit, where most of its AI investments are focused, was largely responsible for the increase.
During the quarter, Microsoft recorded a net income of $21.87 billion, or $2.93 per diluted share, surpassing Wall Street expectations. Its revenue for the quarter also exceeded expectations, reaching $62.02 billion, an 18% increase from the previous year.
Microsoft Establishing Itself as an AI Leader
Jeremy Goldman, director of briefings at Insider Intelligence, stated that "Microsoft is firmly establishing itself as a frontrunner in the AI race." He believes that the company's AI technology could help expand its share of the digital advertising market. Insider Intelligence anticipates that Microsoft's worldwide ad revenues will grow by 12% this year to $14.93 billion. However, it notes that Google is also expected to expand its much larger ad business by 10% in the same period.
Analysts polled by FactSet Research had estimated Microsoft's revenue to be $61.14 billion. For the January-March quarter, they project revenue of $60.97 billion. These results are the first to incorporate the finances of video-game maker Activision Blizzard, which Microsoft acquired in October 2023 for $69 billion.
Strong Performance in Cloud Computing and Other Divisions
Microsoft's cloud-focused business segment saw significant growth, with a 20% increase in revenue to $25.88 billion for the quarter compared to the same period last year. Revenue from the company's Office suite of products and the LinkedIn professional social network grew 13% to $19.25 billion. The personal computing business, which includes Xbox video games and services, experienced a 19% growth to $16.89 billion, largely due to the addition of Activision Blizzard to the segment.
The company's shares initially dropped in after-hours trading, but later recovered much of the loss. Analysts believe that investors initially had concerns about Microsoft's aggressive investment plans.
