Microsoft Reports Rising Revenue as A.I. A Fruitful Investment

Microsoft Reports Rising Revenue as A.I. A Fruitful Investment

Microsoft gave more signs on Thursday that its big investment in artificial intelligence is starting to pay off, as it reported a 17 percent jump in revenue and a 20 percent increase in profit for the first three months of the year.

Revenue was $61.9 billion, up from $52.9 billion a year earlier. Profit came to $21.9 billion, up from $18.3 billion. The results beat Wall Street expectations.

A year after Microsoft began its efforts to put A.I. into everything it does, the company said sales of its flagship cloud computing product, Azure, have increased 31 percent. More than a fifth of that growth came from its generative A.I. services, which include selling access to technology developed by its partner, OpenAI.

In a recent quarter, A.I. push has helped it gain market share from Amazon, a leading cloud service provider. In January, the company said 53,000 customers were using its cloud A.I. services, with a third of them new to Azure.

“Azure has become the port of call for almost anyone doing any A.I. project,” Satya Nadella, chief executive, said in a call with investors.

This is the first full quarter when commercial customers can get versions of Microsoft’s productivity suite with A.I. tools, such as transcribing a virtual meeting in Teams or summarizing a document in Word. Although the company didn’t say how many A.I. subscription – which costs $30 a month – it was sold, commercial subscriptions are up 15 percent.

Mr Nadella said several corporate clients, including oil giant BP and drugmaker Novo Nordisk, had bought more than 10,000 licenses each.

(The New York Times sued OpenAI and Microsoft in December, alleging copyright infringement of news content related to their A.I. system.)

Microsoft has committed $13 billion to its partnership with OpenAI, maker of the ChatGPT chatbot, and it has built new data centers around the world to accommodate what it expects will be more A.I. request. The company spent $14 billion on capital expenditures and leases in the first three months of the year, up from $11.5 billion in the previous quarter.

Amy Hood, Microsoft’s chief financial officer, said the company would continue to increase capital spending and emphasized that investments would be made to meet customer interest.

“At the minute, we have demand that slightly exceeds our supply,” he said.

Gaming, Microsoft’s most important consumer product, rose 51 percent to $5.5 billion, with a big boost from its $69 billion acquisition of Activision Blizzard, maker of Call of Duty and other blockbuster games, in October.

And revenue from Windows software preinstalled on new personal computers rose 11 percent, more than the company expected, as the personal computer market stabilized after the pandemic.