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.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
STRUGGLING TO SURVIVE: The group is proposing a consortium of investors, with Tesla as the largest backer, and possibly a minority investment by Hon Hai Precision Nissan Motor Co shares jumped after the Financial Times reported that a high-level Japanese group has drawn up plans to seek investment from Elon Musk’s Tesla Inc to aid the struggling automaker. The group believes the electric vehicle (EV) maker is interested in acquiring Nissan’s plants in the US, the newspaper reported, citing people it did not identify. The proposal envisions a consortium of investors, with Tesla as the largest backer, but also includes the possibility of a minority investment by Hon Hai Precision Industry Co (鴻海精密) to prevent a full takeover by the Apple supplier, the report said. The group is
RSS