Microsoft Corp’s cloud computing and artificial intelligence (AI) business helped the company achieve $70.1 billion in sales and an 18 percent increase in profits for the January-March quarter, providing a much-needed boost for investors during a turbulent time for the tech sector and the US economy.
The company, celebrating its 50th anniversary this year, reported a quarterly net income of $25.8 billion, or $3.46 per share, exceeding analysts’ forecasts of $3.22 per share. Revenue for the period was $70.1 billion, a 13 percent increase from the same period last year, also surpassing analysts’ expectations of $68.44 billion.
Microsoft CEO Satya Nadella attributed the company’s strong quarter to cloud growth. The cloud unit generated $26.8 billion in revenue, a 21 percent year-on-year increase, beating analysts’ projections of $26.17 billion. “Cloud and AI are essential inputs for every business to expand output, reduce costs, and accelerate growth,” Nadella stated.
The personal computing unit, including laptop business and Xbox services, saw a 6 percent revenue increase to $13.4 billion. Microsoft had previously announced plans to invest around $80 billion in capital and infrastructure for the fiscal year.
During an investor call, Nadella mentioned that demand for cloud and AI remained strong, but the company was continually adjusting its investments based on efficiency improvements and customer preferences. “We want to ensure we’re accounting for the latest and greatest information,” he explained.
Microsoft revealed that its partnership with ChatGPT creator OpenAI was evolving, and it would no longer be the exclusive provider of the startup’s computing needs. The company returned $9.7 billion to shareholders through dividends and share repurchases during the quarter.
“This was a strong, steady quarter from a company that’s matured into its AI moment,” said Emarketer principal analyst Jeremy Goldman. Despite some challenges, “Microsoft’s ability to turn AI enthusiasm into real revenue sets it apart in a crowded field with promise but short on payoff,” he added.
