AP – Microsoft on Wednesday reported its quarterly sales grew 16 per cent to USD65.6 billion as the company sought to assure investors its huge spending on artificial intelligence (AI) is paying off.
The company has spent billions of dollars to expand its global network of data centres and other physical infrastructure required to develop AI technology that can compose documents, make images and serve as a lifelike personal assistant at work or home.
As a result, AI-related products are now on track to contribute about USD10 billion to the company’s annual revenue, the “fastest business in our history to reach this milestone”, CEO Satya Nadella said on a call with analysts on Wednesday.
The software maker also reported an 11 per cent increase in quarterly profit to USD24.7 billion, or USD3.30 per share, which beat Wall Street expectations for the July-September period.
Analysts polled by FactSet Research were expecting Microsoft to earn USD3.10 per share on revenue of USD64.6 billion.
Microsoft hasn’t yet formally reported revenue specifically from AI products but said it has infused the technology and its AI assistant, called Copilot, into all of its business segments, particularly its Azure cloud computing contracts.
Leading in sales for the quarter was Microsoft’s productivity business segment, which includes its Office suite of email and other workplace products, growing 12 per cent to USD28.3 billion.
Microsoft’s cloud-focused business segment grew 20 per cent from the same time last year to USD24.1 billion for the three months ending on September 30.
Its personal computing business, led by its Windows division, grew 17 per cent to USD13.2 billion. A big part of that growth came from Microsoft’s Xbox video game business, which was boosted by its purchase of game publishing giant Activision Blizzard a year ago.
Microsoft and the computer makers that run its Windows operating system also this year unveiled a new class of AI-imbued laptops as the company confronts heightened competition from Big Tech rivals in pitching generative AI technology to consumers and workplaces.
Building and operating AI systems is costly and Microsoft reported spending USD20 billion over the quarter, mostly for its cloud computing and AI needs.
That includes building energy-hungry computing centers and supplying them with specialised chips to train and run AI models.
