Artificial Intelligence Boosts Microsoft’s Revenues and Profits | Economy

They called it the Super Bowl of fintech financial performance. On Tuesday, Microsoft launched a gamble aimed at keeping it above Apple as the most valuable technology company on the stock market. On Tuesday, the company announced a turnover of $62,000 million between October and December 2023. The figure represents an 18% increase in one year thanks to its cloud business, a vital sector for artificial intelligence and society, which the company supports Open AI, which allows the company to include ChatGPT in several of its products, such as the Bing search engine and the CoPilot assistant. The figure beat Wall Street’s forecasts, but not enough, causing the stock price to fall slightly after the stock market closed.

Net income for the last three months of 2023 is $21.9 billion. This is one of the fastest growing quarters since the quarter ended September 2021. As a result, profit for the second half of 2023 amounted to $44,161 million (€40,718 million). This is an increase of 30% year on year.

CEO Satya Nadella is trying to put Microsoft at the forefront of the artificial intelligence revolution. “We have moved from talking about AI to using it on a large scale,” the manager said in a statement. The company’s growth strategy for 2024 and 2025 is to “infuse” the tool into the entire offering of programs and services. The Microsoft and Open AI alliance has existed since 2019. Last year, the parties extended their “long-term” cooperation. The tech giant is estimated to have invested about $13 billion in the startup.

Microsoft’s cloud business has seen strong growth, with revenue totaling $33.7 billion in the October-December period. Of that amount, $25.8 billion went to Azure, its core brand in this area, which grew 30%, beating Wall Street’s estimate of 28%. The company says earnings from this business will remain stable during the current quarter. Cloud computing service is vital for the development of artificial intelligence. Increased demand for the tool increased Azure revenue by 6%, according to Amy Hood, chief financial officer. Last quarter it was 3%.

In the personal computing business, the company increased its turnover to nearly $17 billion. Office sales rose 9%, driven by increased demand for Microsoft 365. The company also saw revenue growth in its video games business, driven by $2.4 billion in revenue from Xbox, its console that benefited from the acquisition of Blizzard’s Activision. The Redmond company’s purchase of the industry giant boosted overall revenue by 4%. Despite this, the company announced this week that it would lay off 1,900 employees, mostly from Activision Blizzard. This is 8% of the Microsoft Gaming division.

The company made headlines recently when it surpassed the historic $3 trillion market value barrier. It’s a select group known as the “Magnificent Seven,” a group of technology companies (Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA and Tesla) that are leading the stock market’s gains thanks to the strong performance of their games. Since the end of 2022, the value of all seven has increased by 70%, and this month alone the increase was about 9%. Microsoft’s stock price has risen 70% over the past year, far outperforming the Nasdaq index.

Microsoft and Alphabet, which reported record revenues, were the first to release results in a week meant to demonstrate the financial power of artificial intelligence in the industry. Three other $10 billion tech companies will report earnings this week.

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