Microsoft on Wednesday reported a 16% rise in quarterly revenue to $65.6 billion as it sought to ensure that its huge spending on artificial intelligence paid off for investors.
The company will expand its global network of data centers and other physical infrastructure needed to develop AI technology that creates documents, creates images, and acts as a lifelike personal assistant at work and home. billions of dollars have been spent on it.
As a result, AI-related products are now on track to contribute about $10 billion to the company’s annual revenue, “making it the fastest business in our history to reach this milestone,” he said on a call with analysts Wednesday. CEO Satya Nadella said at the conference.
The company also reported an 11% increase in quarterly profit to $24.7 billion, or $3.30 per share, which beat Wall Street expectations for the July-September period.
Analysts surveyed by FactSet Research expected Microsoft to post earnings of $64.6 billion and revenue of $3.10 per share.
Microsoft has not yet officially reported revenue specifically for its AI products, but it said it has introduced the technology and an AI assistant called Copilot across all of its business segments, particularly its Azure cloud computing contracts.
Microsoft’s Productivity division, which includes the Office email suite and other workplace products, led sales in the quarter, up 12% to $28.3 billion.
Microsoft’s cloud-focused business unit grew 20% year over year to $24.1 billion in the three months ended Sept. 30.
The personal computing business, led by the Windows division, grew 17% to $13.2 billion. Much of this growth has come from Microsoft’s Xbox video game business, which was boosted by its acquisition of game publishing giant Activision Blizzard a year ago.
Microsoft and computer makers running its Windows operating system are launching a new class of AI-incorporated laptops this year as they face increasing competition from Big Tech rivals in selling generative AI technology to consumers and workplaces. announced the top.
Building and operating AI systems is expensive, and Microsoft reported spending $20 billion in the quarter, primarily for cloud computing and AI needs. This involves building energy-intensive computing centers and supplying them with specialized chips to train and run AI models.
Microsoft is also investing billions of dollars in AI startups, particularly its partner OpenAI, maker of the chatbot technology underlying ChatGPT and Microsoft’s own Copilot.
Nadella emphasized that the company is helping customers apply its AI platform in the workplace as AI tools transform jobs and operations.
Nadella, who is in his 10th year as CEO, will receive a 63% increase in annual compensation to $79 million this year, according to a statement filed ahead of Microsoft’s annual shareholder meeting scheduled for December. That’s despite Mr. Nadella’s offer to reduce his cash incentives to reflect his personal responsibility for addressing cybersecurity threats.
Earlier this year, a scathing report by a federal review board found that a “series of security failures” by Microsoft allowed Chinese state-backed hackers to break into the email accounts of senior U.S. officials.
