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Feature Story
Microsoft touts AI strength, but shares dip as market digests costs
Jan 31, 2024 · businesstoday.in
Total revenue grew 18% to $62 billion in the quarter ended Dec. 31, beating the average analyst estimate of $61.12 billion. The company's Intelligent Cloud unit, which includes Azure, saw a 20% growth to $25.9 billion, and Azure sales grew 30%, outperforming Google Cloud's 25.7% growth. Microsoft's More Personal Computing segment grew 19% to $16.9 billion, aided by the acquisition of Activision Blizzard. The Productivity and Business Process segment, which includes LinkedIn and Office sales, reported a 13% increase in sales to $19.2 billion. Despite these positive results, AI-related companies, including Microsoft, lost $190 billion in stock market value after quarterly results failed to impress investors.
Key takeaways
- Microsoft exceeded market estimates for quarterly profit and revenue, largely due to new artificial-intelligence features attracting customers to its Azure cloud service.
- Despite the success, Microsoft shares dropped 1% after-hours due to concerns over rising costs associated with developing AI features, with the company forecasting operating expenses of $15.8 billion to $15.9 billion in the current quarter.
- Microsoft's collaboration with OpenAI has resulted in the integration of chatbots into its core products, contributing to a 57% rise in shares in 2023, but also increasing costs.
- Microsoft's Intelligent Cloud unit, which includes the Azure platform, saw a 20% growth to $25.9 billion, with Azure sales growing 30%, outperforming Google Cloud's 25.7% growth.