Microsoft quarterly profits soar on AI and cloud growth

Technology giant Microsoft said its profit soared above expectations in the recently ended quarter, driven by its cloud computing and artificial intelligence units.

Microsoft reported profit of US$27.2 billion ($33.4b) on revenue of US$76.4b, some US$29.9b of which was brought in by its Intelligent Cloud business.

“Cloud and AI [artificial intelligence] is the driving force of business transformation across every industry and sector,” Microsoft chief executive Satya Nadella said in an earnings release.

“We’re innovating across the tech stack to help customers adapt and grow in this new era.”

Microsoft’s Azure cloud computing offerings brought in more than US$75b ($91.9b) for the company’s fiscal year, which ended on June 30, in an increase of 34% from the prior year, according to Nadella.

Microsoft shares jumped about 7% in after-market trades that followed release of the earnings figures.

“This was a slam-dunk quarter for Microsoft, with cloud and AI driving significant business transformation across every sector and industry,” Wedbush Securities analyst Dan Ives said in a note to investors.

“The company continues to capitalise on the AI revolution.”

Microsoft is well-positioned to make money as increasing numbers of companies ramp up efforts to take advantage of artificial intelligence in their businesses, according to Ives.

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 US$80b into capital and infrastructure in the fiscal year.

Nadella has said finding enough power sources for its AI data centre needs was a priority.

Microsoft in early July slashed a little less than 4% of its global workforce as it seeks to cut layers of middle management and leverage new technologies.

“We continue to implement organisational changes necessary to best position the company and teams for success in a dynamic marketplace,” Microsoft said.

The job cuts follow a round in May that saw about 6000 positions culled from its global workforce.

The company, which is advancing in its plans to deploy AI across all its products, said it was working to “empower employees to spend more time focusing on meaningful work by leveraging new technologies and capabilities”.

– Agence France-Presse