Microsoft surpassed market expectations for quarterly profit and revenue, buoyed by the integration of new artificial-intelligence features into its Azure cloud service, which attracted customers seeking to develop their own AI services. Despite this positive performance, Microsoft’s shares dipped 1% in after-hours trading as investors digested news of increasing costs associated with developing these AI features. The company anticipates operating expenses of $15.8 billion to $15.9 billion in the current quarter, up from $15.4 billion previously, with a notable rise expected in capital expenditures.
In collaboration with OpenAI, Microsoft has been incorporating chatbots into its core products such as Office software and Bing search engine, appealing to business customers eager to explore the potential of AI. This strategic move has contributed to a 57% rise in Microsoft’s shares in 2023, although it has also led to increased costs. Investors are closely monitoring the growth of Microsoft’s Azure and Office business segments to assess whether they can keep pace with the substantial investments planned for data centers to support generative AI.
Microsoft’s CEO Satya Nadella highlighted the company’s shift from discussing AI to implementing it at scale, emphasizing the widespread adoption of AI across its technology stack. Brett Iversen, Microsoft’s VP for investor relations, noted that AI contributed significantly to the growth of the Azure cloud-computing platform, with 6 percentage points of growth in the second quarter attributed to AI, double the rate observed in the first quarter. Despite concerns about rising costs, Microsoft reported strong financial results, with total revenue growing 18% to $62 billion and adjusted profit per share surpassing analyst estimates.
