Microsoft beat analysts’ expectations on Tuesday as its big bets on artificial intelligence, particularly its Azure cloud computing unit, paid off.
The software giant reported revenue of $62 billion, up 18% year over year, beating expectations for earnings of $61.1 billion.
CEO Satya Nadella said: “We have moved from talking about artificial intelligence to applying artificial intelligence at scale. By integrating artificial intelligence into every layer of our technology stack, we are winning new customers and Helping drive new efficiencies and productivity gains in every industry.”
The financial report shows that Microsoft’s cloud revenue increased by 24% year-on-year. Driven by the acquisition of Activision Blizzard, the Xbox content and services department’s revenue increased by 61%.
Microsoft recently surpassed Apple as the world’s most valuable company, and last week became the second company in history to reach a stock market valuation of $3 trillion.
Microsoft is seen as a leader in artificial intelligence, both through its own efforts and its close relationship with OpenAI, the maker of ChatGPT (Microsoft is OpenAI’s largest shareholder). In November, Microsoft CEO Satya Nadella played a key role in artificial intelligence. Ultraman Sam returns Microsoft served as OpenAI CEO after Altman’s shocking ouster. Microsoft has an observer seat on OpenAI’s board of directors.
“The company’s recent financial performance, highlighted by a massive 18% revenue increase in today’s earnings report, signals a powerful combination of innovation and strategic foresight,” said Jeremy Goldman, senior director of briefings at Insider Intelligence/eMarketer. “In the field of artificial intelligence, Microsoft is firmly establishing itself as the leader in the artificial intelligence race. “
Microsoft’s influence on the development of artificial intelligence has grown so rapidly that it has drawn scrutiny from regulators and those outside the tech industry. Shares are up 10% in the past month as investors shrug off concerns about growing headwinds.
The U.S. Federal Trade Commission announced last week that it has begun investigating the company’s $10 billion investment in OpenAI, as well as transactions with Google, Amazon, and artificial intelligence startup Anthropic. The UK Competition and Markets Authority is also reviewing the deal. EU regulators have said they may launch a similar investigation. The New York Times sues OpenAI and Microsoft In early December, ChatGPT was accused of copyright infringement.
This quarter also marks the first time Microsoft has reported revenue from Activision Blizzard, the premier gaming studio behind such popular titles as Call of Duty and World of Warcraft. In October, Microsoft completed its $69 billion acquisition of the video game maker. After lengthy back-and-forth discussions with regulators.
Last week, Microsoft laid off 1,900 employees in its gaming division, including employees at Activision and some on Xbox consoles, citing layoffs within the two companies.