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Microsoft (MSFT) announced second-quarter financial results on Tuesday, with revenue and bottom line exceeding expectations. The company reported adjusted earnings of $2.93 per share on sales of $62 billion, beating expectations of adjusted EPS of $2.78 on sales of $61.1 billion.
But Beat wasn’t able to fully satisfy investors, with the stock dropping about 1% in Wednesday’s pre-market review.
Microsoft’s all-important cloud revenue peaked at $33.7 billion, beating expectations of $32.2 billion. The company’s intelligent cloud business, which includes Azure services, came in at $25.8 billion, compared to expectations of $25.3 billion. The company said AI services contributed 6 percentage points to Azure revenue growth, up from 3 percentage points in the previous quarter.
“We’ve moved from talking about AI to applying AI at scale,” Microsoft CEO Satya Nadella said in a statement. “By bringing AI to every layer of our technology stack, we are winning new customers and driving new benefits and productivity improvements across all sectors.”
Microsoft has been one of the biggest beneficiaries of the AI trade, with its stock price soaring 50% in the past 12 months, pushing Microsoft’s market cap to more than $3 trillion.
As of Tuesday afternoon, Microsoft was the world’s richest company by market capitalization, surpassing longtime rival Apple (AAPL), but has suffered from a recent share price decline over concerns about weak iPhone sales in China. has been done.
On the productivity front, Microsoft’s productivity and business processes revenue reached $19.25 billion, slightly above expectations of $19.03 billion. The company’s More Personal Computing business (which includes sales from its Windows software and Xbox gaming divisions) generated $16.89 billion.
Microsoft’s AI efforts permeate nearly every part of its business, and the company is focused on ensuring that results are achieved. So far, the company has monetized its AI efforts through its generative AI cloud service, Copilot for Microsoft 365 productivity platform, and Copilot Pro for consumers.
Earlier this month, the company opened Copilot for Microsoft 365 to all businesses, removing the previous requirement that customers need at least 300 employees to sign up for the paid service. Customers pay $30 per user per month for access to the software. His Copilot Pro for consumers, on the other hand, costs $20 per user per month and is aimed at consumers who want to take advantage of Copilot’s more advanced features.
Microsoft, as well as rivals Google (GOOG, GOOGL) and Amazon (AMZN), have poured billions of dollars into AI investments in the last year, aiming to gain an edge in the race to become the AI software leader. It’s done.
Microsoft grabbed an early lead thanks to its investment in ChatGPT developer OpenAI, but Google and Amazon are gaining momentum. Google released its powerful Gemini AI model in December, and in September Amazon announced a $4 billion investment in AI company Anthropic, giving the cloud giant minority shareholder status in the company.
However, the generative AI technology has recently come under fire after an X user posted an explicit AI-generated image of Taylor Swift. The move has led to further calls for legislation targeting so-called deepfake images and videos.
Still, this controversy is unlikely to slow down the development of AI. Generative AI will be a big player throughout 2024, as companies are releasing product announcements related to this technology at a steady pace, and PC and smartphone vendors are debuting their own products that can run generative AI software natively. It’s clear that it’s powerful.
Daniel Howley I’m the technology editor at Yahoo Finance. He has been covering the technology industry since his 2011. You can follow him on Twitter. @Daniel Howley.
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