Microsoft Reports $65.6 Billion In Quarterly Sales As Investors Look To Know If AI Spending Worth It

Microsoft reported an 11% profit increase for the July-September quarter compared to the same period last year, as investors sought signs that the company’s significant investment in artificial intelligence is paying off.

The business announced quarterly net income of $24.7 billion, or $3.30 per share, exceeding Wall Street’s estimates.

The Redmond, Washington-based software company reported revenue of $65.6 billion in the quarter, up 16% over the previous year.

Analysts polled by FactSet Research expected Microsoft to earn $3.10 per share on $64.6 billion in revenue.

Microsoft Reports $65.6 Billion In Quarterly Sales As Investors Look To Know If AI Spending Worth It

Microsoft does not declare revenue from AI products specifically, but it claims to have integrated the technology and its AI assistant, Copilot, into all of its business sectors, particularly its Azure cloud computing contracts.

Microsoft’s productivity business sector, which includes its Office suite of email and other office tools, led revenues in the quarter, rising 12% to $28.3 billion.

Microsoft’s cloud-focused business segment increased 20% from last year to $24.1 billion in the three months ending September 30.

Its computing business, anchored by the Windows division, increased 17% to $13.2 billion. This year, Microsoft and the computer makers that run its Windows operating system unveiled a new class of AI-enhanced laptops as the company faces increased competition from Big Tech rivals in pitching generative AI technology that can compose documents, create images, and serve as a lifelike personal assistant at work or home.

Building and operating AI systems is expensive, and Microsoft reported spending $20 billion during the quarter, primarily for cloud computing and AI needs.

In a statement released Wednesday, Microsoft CEO Satya Nadella underscored the company’s push to get customers to use AI platforms in their workplaces as AI transforms employment and work processes.

Microsoft Reports $65.6 Billion In Quarterly Sales As Investors Look To Know If AI Spending Worth It

Nadella, now in his tenth year as CEO, had his yearly remuneration rise 63% this year to $79 million, according to a statement submitted before Microsoft’s annual shareholder meeting in December. This is despite Nadella’s willingness to have his cash incentive cut to reflect his responsibility for dealing with cybersecurity concerns.

Earlier this year, a blistering investigation by a government review board identified “a cascade of security failures” by Microsoft that allowed Chinese state-backed hackers to get access to key US officials’ email accounts.

SOURCE | AP