Microsoft has reported better-than-expected revenue and profit for the fourth quarter, boosted by its cloud business and investments in artificial intelligence (AI). The company’s cloud services benefited from product upgrades featuring new AI technology. However, costs increased as Microsoft built new data centers to support AI.
Microsoft has been integrating AI into its own products, such as “Copilot,” which can summarize a day’s worth of emails into a quick update. The company is also aiming to sell cloud computing services to other firms to build their own AI services.
While Azure, Microsoft’s cloud computing platform, experienced slightly higher sales growth than anticipated, the company’s capital expenditures reached a new high as it invested heavily in AI services. Microsoft is competing with other cloud providers for a limited supply of Nvidia Corp’s chips, which are crucial for creating AI products and services.
Microsoft’s revenue for the fiscal fourth quarter reached $56.2 billion, surpassing analysts’ consensus estimate of $55.5 billion. Net income was $2.69 per share compared to an expected $2.55 per share.
The Intelligent Cloud unit, which includes Azure, generated $24 billion in revenue, exceeding expectations of $23.8 billion. Azure’s revenue grew by 26%, outperforming the estimated growth of 25.2%.
Despite a decline in PC sales, Microsoft’s segment containing LinkedIn and Office software experienced growth, reaching $18.3 billion, surpassing analysts’ consensus estimate of $18.1 billion.
Capital expenditures for Microsoft rose to $10.7 billion in the fiscal fourth quarter, reflecting the company’s expectations for increased demand for AI services.
Microsoft remains focused on leading the AI platform shift and has started integrating AI functionality across its products, including Azure, Microsoft 365, GitHub, and developer tools.
With its strong performance in Q4, Microsoft continues to capitalize on the growing interest in AI and cloud services.