AI Investments Help Microsoft Revenues Exceed Quarterly Expectations

Microsoft is currently the biggest public company worldwide, with a stock market value of approximately $3 trillion. Its latest financial results show that profits greatly surpassed quarterly expectations.

During the first three months of this year, Microsoft’s total revenue reached $61.6 billion, which represents a 17% increase. This exceeds the expectations of analysts on Wall Street, who projected revenue growing to $60.8 billion. The company’s earnings per share also hit $2.94, a 20% increase. This is slightly higher than the $2.83 figure projected by analysts.

As of last week, shares in the group had also risen 4%. Over the last 12 months, the company’s shares have grown by more than 30%, which is pretty impressive but not when compared to rallies seen by Google and Amazon, whose stocks have grown by more than 40% and 60% respectively.

The tech giant has, in the last couple of years, also injected billions of dollars into artificial intelligence in an effort to boost growth, especially for its cloud computing services. In the last quarter, revenue from its cloud computing services increased by more than 20%.

Microsoft CEO Satya Nadella stated that the company’s artificial intelligence tools are putting together a new era of artificial intelligence transformation, which shall drive better business outcomes across various roles and industries. The company’s Azure cloud computing business recorded significant increases in its deals, with Nadella noting that the business also began selling the Copilot AI add-on to small enterprises.

Microsoft has made huge investments into OpenAI, which developed ChatGPT. In addition, last month, Microsoft revealed that it had hired Mustafa Suleyman, cofounder of Deepmind AI. Suleyman is also the founder of Inflection AI, a billion-dollar startup.

The company is now focused on monetizing its dominance in the artificial intelligence space, with its latest reports showing that artificial intelligence contributed more than 5% of revenue growth within its Azure division in the last months of 2023. This is an increase, particularly in comparison to figures from the prior quarter.

In its latest announcement, Microsoft also revealed that artificial intelligence-based additions on LinkedIn had boosted engagement on the platform. Nadella revealed that the professional network’s artificial intelligence tools for writing articles and posts had allowed sessions to grow by more than 10%. LinkedIn’s revenue also rose 10%.

In addition, Microsoft announced that it had entered into different high-profile deals, among them a five-year, billion-dollar contract with Coca-Cola. Microsoft is also party to a partnership with Mistral, an AI startup, which involves providing access to the startup’s models in Azure.

It looks as if AI is acting as a tailwind for many companies that leverage it, and it isn’t surprising that major tech companies such as Apple Inc. (NASDAQ: AAPL) are also devoting considerable resources into developing their own AI solutions and products.

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