Microsoft exceeds revenue forecasts with AI push and cloud deployment

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Microsoft on Thursday reported third-quarter revenue and profit that beat analysts' expectations, driven by a push for artificial intelligence and increased adoption of cloud solutions worldwide.

The company's net income increased 20% on an annual basis to $21.9 billion. Earnings per share rose 20% to $2.94, beating expectations of $2.82.

Sales for the January-March period rose 17% to $61.9 billion, beating analysts' expectations of $60.8 billion.

Microsoft's fiscal year ends in June.

“Microsoft [AI assistant] Copilot and Copilot Stack are orchestrating a new era of AI transformation to drive better business outcomes across every role and industry,” said Satya Nadella, Chairman and CEO of Microsoft.

Microsoft 365 Copilot, launched last March, combines the power of large-scale language models and generative AI with the company's apps and platform.

The company has released several updates to this tool.

The Redmond, Washington-based company has invested heavily in building out AI capabilities.

This month, it announced a $1.5 billion investment in Abu Dhabi-based AI and cloud company G42 to strengthen its global expansion plans and strengthen the UAE's position as a global technology center.

In January, the company announced it was adding a new Copilot key to Windows keyboards to support the introduction of AI into its hardware products.

The company's shares, which have risen nearly 8% so far this year, rose more than 4.4% in after-hours trading Thursday to $416.6 a share.

At market close, the stock price was $399, giving Microsoft a value of $2.97 trillion.

Revenue from Microsoft's intelligent cloud division, which includes the Azure public cloud, rose 21% for the year to $26.7 billion, beating the $26.2 billion consensus of analysts surveyed by StreetAccount.

Revenue from Azure and other cloud services, which Microsoft doesn't report in dollars, rose about 31%.

Since 2016, Microsoft has been working to build Azure into the world's AI supercomputer, as the foundation of our vision to democratize artificial intelligence.

“While several high-tech companies have been unable to continue growing at the same pace as in past quarters due to significantly compressed margins on both the cost and revenue side, Microsoft's AI and cloud growth numbers have “This shows that the company has managed to weather the crisis,” said Thomas Monteiro, senior analyst at Investing.com. National.

“This shows that companies around the world are increasingly betting their future on AI and big data, and they're doing so with Microsoft's comprehensive best-of-breed offerings.”

Microsoft's Productivity and Business Processes segment, which includes revenue from its Microsoft Office business and LinkedIn, surged 12% to $19.6 billion in the March quarter.

LinkedIn's revenue grew by almost 10% every year. Microsoft hasn't disclosed how much money LinkedIn makes or how many users it has.

The company said its Microsoft 365 Consumer bundle of apps had 80.8 million subscribers at the end of last quarter, an increase of more than 3% on a quarterly basis.

Personal Computing segment sales rose 17% to $15.6 billion in the quarter.

Search and news ad revenue, excluding traffic acquisition costs, increased 12%, while device revenue decreased 17%.

Xbox content and services revenue increased 62% in the third quarter.

Updated: April 26, 2024, 12:08 AM



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