Microsoft Corp on Tuesday reported strong quarterly earnings but saw its shares slip on figures showing its crucial cloud computing unit did not grow as strongly as expected.
Microsoft said it made a profit of US$22 billion on US$64.7 billion in revenue in the recently ended quarter, up from the same period a year earlier.
Cloud unit revenue of US$36.8 billion, however, disappointed investors and shares slid nearly three percent in after-market trades.
Photo: Gonzalo Fuentes, Reuters
Money brought in from cloud computing has driven blockbuster earnings quarter after quarter, and a hint that stellar growth may be slowing was enough to give investors pause.
Microsoft is among the major contenders in the race to build out artificial intelligence (AI) systems, pouring billions of dollars into the technology in the hope it will pay off.
The company is keen to monetize generative AI, having moved the fastest to implement it across all its products, and pouring US$13 billion into OpenAI, the start-up stalwart behind ChatGPT.
CFRA Research viewed the earnings results as "largely in line" across Microsoft's core businesses and believes that the company is "incrementally improving" the money it makes from AI, according to senior equity analyst Angelo Zino.
"Still, we acknowledge that the better-than-expected cloud results from Alphabet Inc last week had investors looking for more," Zino said.
Google-parent Alphabet reported profit and revenue that beat expectations as its AI-amped cloud and search ads businesses thrived.
The AI frenzy has helped Microsoft's cloud computing business grow in the double digits, which analysts said could be hard to sustain.
Microsoft's big stake in OpenAI along with its own Copilot AI help it maintain a leadership position in AI, according to Emarketer senior analyst Gadjo Sevilla.
Revenue from Microsoft's AI-infused "Intelligent Cloud" unit was US$28.5 billion, a 19-percent increase from the same quarter a year earlier, according to the earnings figures.
Microsoft CEO Satya Nadella said on an earnings call that use of its AI offerings is ramping up, from workplace software to Bing search and Copilot AI relied on by developers.
"I'm energized about the opportunities ahead," Nadella said. "We are investing for the long term in our fundamentals, in our innovation and in our people."
Microsoft's Azure platform drove a strong increase in revenue from server products and cloud services, according to the company.
Nadella said the company is "focused on meeting the mission-critical needs of our customers across our at-scale platforms today, while also ensuring we lead the AI era."
Microsoft reported a net income of US$88.1 billion for its fiscal year on revenue of US$245.1 billion, up 22 percent and 16 percent respectively.
Money taken in by Microsoft's Xbox video game unit leaped 61 percent, boosted by the acquisition of Activision Blizzard Inc, according to earnings figures.
Microsoft said costs to attract visitors to its search and news services rose 19 percent, as it pressed to compete with Google.
COMPETITION: AMD, Intel and Qualcomm are unveiling new laptop and desktop parts in Las Vegas, arguing their technologies provide the best performance for AI workloads Advanced Micro Devices Inc (AMD), the second-biggest maker of computer processors, said its chips are to be used by Dell Technologies Inc for the first time in PCs sold to businesses. The chipmaker unveiled new processors it says would make AMD-based PCs the best at running artificial intelligence (AI) software. Dell has decided to use the chips in some of its computers aimed at business customers, AMD executives said at CES in Las Vegas on Monday. Dell’s embrace of AMD for corporate PCs — it already uses the chipmaker for consumer devices — is another blow for Intel Corp as the company
MediaTek Inc (聯發科) yesterday said it is teaming up with Nvidia Corp to develop a new chip for artificial intelligence (AI) supercomputers that uses architecture licensed from Arm Holdings PLC. The new product is targeting AI researchers, data scientists and students rather than the mass PC market, the company said. The announcement comes as MediaTek makes efforts to add AI capabilities to its Dimensity chips for smartphones and tablets, Genio family for the Internet of Things devices, Pentonic series of smart TVs, Kompanio line of Arm-based Chromebooks, along with the Dimensity auto platform for vehicles. MeidaTek, the world’s largest chip designer for smartphones
TECH PULL: Electronics heavyweights also attracted strong buying ahead of the CES, analysts said. Meanwhile, Asian markets were mixed amid Trump’s incoming presidency Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares yesterday closed at a new high in the wake of a rally among tech stocks on Wall Street on Friday, moving the TAIEX sharply higher by more than 600 points. TSMC, the most heavily weighted stock in the TAIEX, rose 4.65 percent to close at a new high of NT$1,125, boosting its market value to NT$29.17 trillion (US$888 billion) and contributing about 400 points to the TAIEX’s rise. The TAIEX ended up 639.41 points, or 2.79 percent, at 23,547.71. Turnover totaled NT$406.478 billion, Taiwan Stock Exchange data showed. The surge in TSMC follows a positive performance
FUTURE TECH: Nvidia CEO Jensen Huang would give the keynote speech at this year’s Consumer Electronics Show, which is also expected to highlight autonomous vehicles Gadgets, robots and vehicles imbued with artificial intelligence (AI) would once again vie for attention at the Consumer Electronics Show (CES) this week, as vendors behind the scenes would seek ways to deal with tariffs threatened by US president-elect Donald Trump. The annual Consumer Electronics Show opens formally in Las Vegas tomorrow, but preceding days are packed with product announcements. AI would be a major theme of the show, along with autonomous vehicles ranging from tractors and boats to lawn mowers and golf club trollies. “Everybody is going to be talking about AI,” Creative Strategies Inc analyst Carolina Milanesi said. “From fridges to ovens
RSS