The world’s largest public company reports $61.86 billion in revenue following substantial investments in artificial intelligence
Profits at Microsoft exceeded Wall Street’s expectations, thanks to its significant investment in artificial intelligence, which continued to yield positive results in the latest quarter.
The technology giant has poured billions of dollars into AI to accelerate its growth, especially in its cloud computing services, which saw revenue increase by over 20%.
Microsoft’s AI tools “are ushering in a new era of AI transformation, driving improved business outcomes across various roles and industries,” said Satya Nadella, the company’s CEO.
As Microsoft races to incorporate AI into its software and services, Nadella noted that its Azure cloud computing business witnessed double-digit increases in the pace of deals worth $100 million and $10 million. The company has also begun selling its Copilot AI software add-on to small businesses.
Microsoft’s total revenue grew by 17% to $61.86 billion in the third quarter of its financial year, surpassing analysts’ expectations of approximately $60.88 billion. Earnings per share also rose by 20% to $2.94, exceeding the expected $2.83.
Following these results, the company’s shares increased by 4% during after-hours trading in New York on Thursday.
With a stock market value of nearly $3 trillion, Microsoft holds the title of the world’s largest public company. Its shares have climbed by more than 30% over the past year, a significant increase, though not as substantial as the gains seen by Amazon and Google, whose stocks have surged by over 60% and 40%, respectively.
Through a multibillion-dollar investment in OpenAI, the developer of ChatGPT, Microsoft aimed to position itself at the forefront of AI’s advancement and as the prime destination for top talent in the industry. In March, the company made headlines by hiring Mustafa Suleyman, a co-founder of Google’s Deepmind AI subsidiary, along with a co-founder of Inflection AI, a $4 billion startup, and several of its employees.
In November, following the ousting of OpenAI’s co-founder and CEO, Sam Altman, from its board, Altman briefly announced plans to relocate to Seattle and join Microsoft, marking a significant victory for Nadella. The majority of OpenAI’s employees expressed their intention to follow Altman, a move that would effectively dismantle the company. However, Altman was reinstated as CEO just days later.
Microsoft is currently seeking to capitalize on its leadership in this field. In the last months of 2023, the company disclosed that AI had contributed 6% to the revenue growth of its prominent Azure cloud computing division, an increase from 3% in the previous quarter, as reported by Yahoo Finance.
On Thursday, the company announced that AI-driven enhancements to LinkedIn had boosted engagement on the professional social network. Nadella highlighted LinkedIn’s AI tools for composing posts and articles, which he credited for an 11% growth in LinkedIn sessions. Revenue from LinkedIn also saw a 10% increase, according to Microsoft’s press release.
Microsoft has been securing a series of notable AI deals. Just two days before this week’s earnings report, Microsoft revealed that Coca-Cola had signed a five-year, $1.1 billion contract with Azure for AI and cloud computing services. Additionally, last month, Microsoft announced a partnership with AI startup Mistral to provide access to the French company’s models in Azure.
