Microsoft gave further signs Thursday that its heavy investments in artificial intelligence were starting to pay off, as reported a 17 percent increase in revenue and a 20 percent increase in profits during the first three months of the year.
Revenue was $61.9 billion, up from $52.9 billion a year earlier. Profits reached $21.9 billion, up from $18.3 billion. The results exceeded Wall Street's expectations.
A year after Microsoft began pushing to incorporate ai into everything it does, the company said sales of its flagship cloud computing product, Azure, had grown 31 percent. More than a fifth of that growth came from its generative ai services, which include selling access to technology developed by its partner, OpenAI.
In recent quarters, Microsoft's ai push has helped it gain market share from amazon, the leading cloud services provider. In January, the company said 53,000 customers were using its cloud ai services, and a third of them were new to Azure.
“Azure has become a reference point for virtually anyone doing any ai project,” CEO Satya Nadella said on a call with investors.
This was the first full quarter in which business customers could get a version of Microsoft's productivity suite with ai tools, like transcribing virtual meetings in Teams or summarizing documents in Word. Although the company did not say how many ai subscriptions, which cost $30 a month, it had sold, commercial subscriptions grew 15 percent.
Nadella said several corporate clients, including oil giant BP and drugmaker Novo Nordisk, had purchased more than 10,000 licenses each.
(The New York Times sued OpenAI and Microsoft in December, alleging copyright infringement of news content related to their ai systems.)
Microsoft has committed $13 billion to its partnership with OpenAI, the maker of the ChatGPT chatbot, and has been building new data centers around the world to meet what it anticipates will be increased demand for ai. The company spent $14 billion on capital expenditures and leases in the first three months of the year, up from $11.5 billion in the previous quarter.
Amy Hood, Microsoft's chief financial officer, said the company would continue to increase capital spending and emphasized that investments would be made to meet customer interests.
“Right now, we have demand that slightly exceeds our supply,” he said.
Gaming, Microsoft's biggest consumer product, grew 51 percent to $5.5 billion, with a big boost from its $69 billion acquisition of Activision Blizzard, the maker of Call of Duty and other blockbuster games. success, in October.
And revenue from Windows software preinstalled on new personal computers grew 11 percent, more than the company expected, as the personal computer market stabilized after the pandemic.
