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Resilient demand for cloud computing and growing enthusiasm for artificial intelligence led Microsoft to record quarterly revenues in the final three months of 2023.
Revenue from Microsoft’s closely watched cloud division, its main sales driver that includes the Azure cloud computing platform, rose 20% to $25.9 billion, beating analysts’ expectations for $25.3 billion. dollars, with Azure sales growth reaching 30%.
Total revenue rose 18% to a record $62 billion, beating forecasts of $61.1 billion.
Earnings per share of $2.93 were well above analysts’ forecasts of $2.77. Microsoft shares fell nearly 1% in after-hours trading.
Investors are looking for signs that large investments in generative artificial intelligence would boost the revenues and profits of Microsoft and its Big Tech competitors. Microsoft has been catapulted into the center of the generative AI race thanks to its deal with OpenAI, the start-up behind the AI chatbot ChatGPT, to which it has committed up to $13 billion.
The deal gave the world’s second-largest cloud services provider a head start in the race to develop and deploy generative artificial intelligence. Enthusiasm for the rapidly developing technology has fueled a rally in Microsoft’s share price, which has risen more than 60% in the past 12 months. It overtook Apple as the world’s most valuable company, as its market capitalization surpassed $3 trillion.
“We’ve gone from talking about AI to applying AI at scale,” Microsoft CEO Satya Nadella said Tuesday. “By embedding AI into every layer of our technology stack, we are winning new customers and helping drive new benefits and productivity gains across every industry.”
Last quarter, Microsoft said that AI had increased revenue on its Azure cloud platform by about 3 percentage points and that Azure revenue growth would benefit from an “increasing contribution from AI.”
Analysts have been looking closely at how many customers use Microsoft 365 Copilot, a generative AI assistant built into the company’s suite of productivity apps. Microsoft in January made the tool, priced at $30 per user per month for businesses, available to individuals and small and medium-sized businesses.