Microsoft reports quarterly sales up 16% to $65.6 billion as investors ask if AI spending worth it

Microsoft connected Wednesday reported its quarterly income grew 16% to $65.6 cardinal arsenic nan institution sought to guarantee investors its immense spending connected artificial intelligence is paying off.

The institution has spent billions of dollars to grow its world web of information centers and different beingness infrastructure required to create AI exertion that tin constitute documents, make images and service arsenic a lifelike individual adjunct astatine activity aliases home.

As a result, AI-related products are now connected way to lend astir $10 cardinal to nan company’s yearly revenue, nan “fastest business successful our history to scope this milestone,” CEO Satya Nadella said connected a telephone pinch analysts Wednesday.

The package shaper besides reported an 11% summation successful quarterly profit to $24.7 billion, aliases $3.30 per share, which hit Wall Street expectations for nan July-September period.

Analysts polled by FactSet Research were expecting Microsoft to gain $3.10 per stock connected gross of $64.6 billion.

Microsoft hasn't yet formally reported gross specifically from AI products but says it has infused nan exertion and its AI assistant, called Copilot, into each of its business segments, peculiarly its Azure unreality computing contracts.

Leading successful income for nan 4th was Microsoft’s productivity business segment, which includes its Office suite of email and different workplace products, increasing 12% to $28.3 billion.

Microsoft’s cloud-focused business conception grew 20% from nan aforesaid clip past twelvemonth to $24.1 cardinal for nan 3 months ending Sept. 30.

Its individual computing business, led by its Windows division, grew 17% to $13.2 billion. A large portion of that maturation came from Microsoft's Xbox video crippled business, which was boosted by its acquisition of crippled publishing elephantine Activision Blizzard a twelvemonth ago.

Microsoft and nan machine makers that tally its Windows operating strategy besides this twelvemonth unveiled a caller people of AI-imbued laptops arsenic nan institution confronts heightened title from Big Tech rivals successful pitching generative AI exertion to consumers and workplaces.

Building and operating AI systems is costly and Microsoft reported spending $20 cardinal complete nan quarter, mostly for its unreality computing and AI needs. That includes building energy-hungry computing centers and supplying them pinch specialized chips to train and tally AI models.

Microsoft has besides invested billions of dollars successful AI startups, peculiarly its partner OpenAI, shaper of ChatGPT and nan underlying chatbot exertion connected which Microsoft's ain Copilot is based.

Nadella emphasized nan company’s push to get customers applying AI platforms successful their workplaces arsenic AI devices toggle shape jobs and activity tasks.

Nadella, now successful his tenth twelvemonth arsenic CEO, saw his yearly compensation summation 63% this twelvemonth to $79 million, according to a connection revenge up of Microsoft’s upcoming yearly shareholder gathering successful December. That’s contempt Nadella offering to person his rate inducement reduced to bespeak his individual accountability for handling cybersecurity threats.

Earlier this year, a scathing report by a national reappraisal committee recovered “a cascade of information failures” by Microsoft fto Chinese state-backed hackers break into email accounts of elder U.S. officials.