Microsoft reports big profits amid massive AI investments

Microsoft reported quarterly earnings that impressed buyers and confirmed how resilient the corporate is even because it spends closely on AI.

Some buyers have been uneasy in regards to the firm’s aggressive spending on AI, whereas others have demanded it. Throughout this quarter, Microsoft reported that it spent $20 billion on capital expenditures, practically double what it had spent throughout the identical quarter final yr.

Nevertheless, the corporate glad each teams of buyers, because it revealed it has nonetheless been doing effectively within the quick time period amid these long-term investments. The fiscal quarter, which coated July by September, noticed general gross sales rise 16 % yr over yr to $65.6 billion. Regardless of all that AI spending, income have been up 11 %, too.

The expansion was largely pushed by Azure and cloud providers, which noticed a 33 % improve in income. The corporate attributed 12 % of that to AI-related services.

In the meantime, Microsoft’s gaming division continued to problem long-standing assumptions that {hardware} is king, with Xbox content material and providers posting 61 % elevated year-over-year income regardless of a 29 % drop in {hardware} gross sales.

Microsoft has famously been inching away from the basic technique of holding software program and providers unique to its {hardware}, launching first-party games like Sea of Thieves not simply on PC however on the competing PlayStation 5 console from Sony. In comparison with the Xbox, the PlayStation is dominant in gross sales and set up base for this era.

However do not make the error of assuming {that a} 61 % bounce in content material and providers income is solely as a result of Microsoft’s Sport Go subscription service is taking off. The corporate attributed 53 factors of that to the current $69 billion Activision acquisition.