Finance

Microsoft’s second-quarter profits outpace artificial intelligence and cloud computing prowess


Microsoft(Microsoft Corporation) Announcement of second quarter financial results The company reported adjusted earnings of $2.93 per share on revenue of $62 billion, beating expectations for adjusted earnings of $2.78 per share on revenue of $61.1 billion.

However, those performances failed to fully satisfy investors, with the stock’s pre-market rating falling about 1% on Wednesday.

Microsoft’s most important cloud revenue reached $33.7 billion, exceeding expectations of $32.2 billion. The company’s smart cloud business, which includes Azure services, generated revenue of $25.8 billion, compared with expectations of $25.3 billion. According to the company, artificial intelligence services contributed 6 percentage points to Azure revenue growth, up from 3 percentage points in the previous quarter.

“We have moved from talking about artificial intelligence to applying artificial intelligence at scale,” Microsoft CEO Satya Nadella said in a statement. “By integrating artificial intelligence into every layer of our technology stack, we are winning new customers and helping to drive new efficiencies and productivity.” Every department is reaping the benefits. “

Microsoft has been one of the biggest beneficiaries of the artificial intelligence industry. Its stock price has risen by 50% in the past 12 months, and Microsoft’s market value exceeds US$3 trillion.

As of Tuesday afternoon, Microsoft became the world’s richest company by market capitalization, beating out longtime rival Apple (AAPL), which recently had its stock downgraded due to concerns about weak iPhone sales in China.

On the productivity front, Microsoft’s productivity and business process revenue came in at $19.25 billion, slightly above expectations of $19.03 billion. The company’s more personal computing business, which includes sales of its Windows software and Xbox gaming divisions, generated $16.89 billion in revenue.

LAS VEGAS, NV - JANUARY 9: Microsoft Chairman and CEO Satya Nadella at CES 2024 on January 9, 2024 in Las Vegas, Nevada Doug McMillon, President and CEO of Walmart Inc., delivered the keynote speech during CES 2024 at the Venetian Resort in Las Vegas. The world's largest annual consumer technology trade show runs through January 12, with approximately 4,000 exhibitors showcasing their latest products and services to more than 130,000 attendees.  (Photo by Ethan Miller/Getty Images)

Microsoft Chairman and CEO Satya Nadella at the CES 2024 press conference. (Ethan Miller/Getty Images) (Ethan Miller via Getty Images)

Microsoft’s artificial intelligence efforts permeate nearly every part of its business, and ensuring returns is something the company is very focused on. So far, it has done so through its generative AI cloud service, its Copilot for Microsoft 365 productivity platform and its consumer-facing Copilot Pro.

Earlier this month, the company also opened Copilot for Microsoft 365 to all businesses, eliminating the previous requirement that customers need to have 300 or more employees to sign up for the paid service. Customers pay $30 per user per month to access the service. Meanwhile, Copilot Pro for consumers costs $20 per user per month and is available for consumer customers who want to take advantage of Copilot’s more advanced features.

Microsoft and rival Google (Google, Google) and Amazon (Amazon), have been pouring billions into artificial intelligence investments over the last year as they each try to gain an upper hand in the race to become leaders in artificial intelligence software.

Microsoft has a head start with its investment in ChatGPT developer OpenAI, but Google and Amazon are making progress. Google released a powerful Gemini AI model in December, and in September, Amazon announced a $4 billion investment in artificial intelligence company Anthropic to provide support for the cloud. The giant has a minority stake in the company.

But generative AI technology has come under fire recently after users on X posted explicit AI-generated images of Swift, prompting calls for more legislation targeting so-called deepfake images and videos. .

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Still, the controversy is unlikely to slow down the development of artificial intelligence. With companies steadily making product announcements related to the technology, and PC and smartphone vendors launching their own products capable of running native AI software, it’s clear that generative AI will be a force throughout 2024.

Daniel Howley is the technology editor at Yahoo Finance. He has been covering the technology industry since 2011.You can follow him on Twitter @DanielHowley.

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