As Microsoft’s big bet on artificial intelligence continued to pay off in the second quarter, profits far exceeded Wall Street’s expectations.
In an effort to accelerate its development, particularly with regard to its cloud computing services, the tech giant has invested billions of dollars in AI. In the most recent quarter, its cloud computing revenue increased by more than 20%.
Microsoft’s AI tools “are orchestrating a new era of AI change, driving better business results across every function and business,” said Satya Nadella, the chief executive of Microsoft.
Nadella reported that the group’s Azure cloud computing business saw a double-digit increase in the rate of deals worth $100 million and $10 million as it worked to integrate AI into its software and services. Additionally, it has begun selling its Copilot AI technology add-on to small businesses.
In the first three months of Microsoft’s third quarter of its financial year, the company’s total revenue increased 17% to $61.86 billion, surpassing analyst expectations of $60.88 billion. Earnings per share increased 20% to $2.94, ahead of the expected $2.83.
During Thursday’s after-hours investing in New York, the group’s stock increased 4%.
With a stock market value of nearly $3tn, Microsoft is the world’s largest public company. Shares in the firm have increased by more than 30% over the past year – an impressive rise, although less than the rallies of Amazon and Google, whose stocks have risen by more than 60% and 40%, respectively.
Microsoft has sought to position itself as the place for the best talent in the field by investing a multibillion dollars in ChatGPT developer OpenAI. In March, the firm announced it had hired a co-founder of Google’s Deepmind AI company, Mustafa Suleyman, as well as a co-leader of $4bn business Tone AI and several of its employees.
In November, after OpenAI’s table ousted its inc-founder and chief executive, Sam Altman, he quickly said he would decamp to Seattle and add Microsoft in a big coup for Nadella. The majority of OpenAI’s workers said they would add Altman, which would essentially demolish the company. Altman was re-elected as the company’s CEO a few days afterwards.
Microsoft is presently attempting to promote its position of authority in this area. According to Yahoo Finance, the company reported in the final months of 2023 that AI accounted for 6% of the company’s revenue growth in its formidable Azure cloud computing division, up from 3% in the previous quarter.
The company reported on Thursday that LinkedIn’s AI-based additions had boosted user engagement. Nadella praised LinkedIn’s AI tools for posting articles and posts, which he claimed helped the number of LinkedIn sessions increase by 11%. Revenue from LinkedIn increased 10%, per Microsoft’s press release.
It has been entering a number of well-known AI discounts. Two nights before this year’s earnings statement, Microsoft announced that Coca-Cola had signed a five-year, $1.1bn deal with Azure for AI and cloud computing services. It made the announcement last month that it would be able to access the French startup’s Azure models through a partnership with AI startup Mistral.
