Microsoft Reports Strong Results Driven by Cloud and AI

AFP/APP

San Francisco: Technology giant Microsoft posted robust quarterly results on Wednesday, with revenue rising 13 percent to $70.1 billion, powered by a strong performance in its cloud computing and artificial intelligence businesses.

The results, which solidly beat analyst expectations, drove Microsoft’s share price more than eight percent higher in after-hours trading.

The Redmond, Washington-based company also allayed worries that it would suffer due to the high tariff policies of President Donald Trump’s administration, offering a good outlook for the ongoing quarter.

Microsoft has remained more discreet in its support for Trump than its rivals, many of which contributed money to the president’s inauguration fund and announced major investments in the United States.

The company, which celebrates its 50th anniversary this year, saw net profits climb 18 percent to $25.8 billion, compared to the same period last year.

Crucially, Microsoft Cloud revenue reached $42.4 billion, growing 20 percent year-over-year, which Chief Financial Officer Amy Hood attributed to “continued demand for our differentiated offerings.”

Microsoft was one of the first tech giants to double down on artificial intelligence when the launch of ChatGPT in 2022 rocked the tech industry.

Like its rivals, it has spent massively on building the infrastructure necessary to power the AI revolution, with analysts keeping a close eye on the return on investment. The company in January said it was on track to pump about $80 billion into capital and infrastructure this fiscal year.

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But CEO Satya Nadella said that even if “I feel very, very good about the pace” of investments, the company was always tweaking its spending. He added that finding enough power sources for its AI data center needs was a priority.

Microsoft this quarter said its relationship with ChatGPT creator OpenAI was evolving and that it would no longer be the exclusive provider of the key startup’s colossal computing needs. It has been a major backer of OpenAI, mainly by providing the heavy computing capacity required to build AI models.

The company’s Intelligent Cloud segment, a key part of Microsoft’s business, showed particularly strong growth with revenue of $26.8 billion, up 21 percent. Its Azure and other cloud services revenue surged 33 percent, reflecting the increasing adoption of Microsoft’s cloud platforms.

The Productivity and Business Processes division, which includes Office 365 and LinkedIn, generated $29.9 billion in revenue, a 10 percent increase.

The company said it 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 Jeremy Goldman of Emarketer.

Despite a few hiccups, “Microsoft’s ability to turn AI enthusiasm into real revenue… sets it apart in a field crowded with promise but short on payoff.”