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Microsoft’s Profits Skyrocket: AI and Cloud-Computing Investments Pay Off Big Time!

by Tech Desk
1 minutes read
Microsoft’s Profits Skyrocket: AI and Cloud-Computing Investments Pay Off Big Time!

Microsoft Corp. reported a 33% increase in profits for the October-December quarter, largely attributed to its significant investments in artificial intelligence technology. The company’s earnings were bolstered by growth in its cloud computing unit, where Microsoft has been focusing most of its AI investments.

It is declared that, the Redmond-based software maker posted a net income of $21.87 billion, or $2.93 per diluted share, surpassing Wall Street expectations of $2.79 per share. Microsoft also reported revenue of $62.02 billion for the quarter, up 18% from $52.75 billion a year earlier.

“Microsoft is firmly establishing itself as a pioneer in the AI race,” said Jeremy Goldman, director of briefings at Insider Intelligence. He suggested that AI technology could help expand Microsoft’s involvement in digital advertising and projected that Microsoft’s global advertising revenue will grow 12% this year to $14.93 billion.

The recent acquisition of video game maker Activision Blizzard further boosted Microsoft’s revenue growth by four points but also reduced operating profits due to accounting adjustments and integration costs.

Despite the positive financial results, Microsoft shares initially fell in after-hours trading before recovering much of that loss later on. Analysts speculated that investors were initially concerned about Microsoft’s aggressive investment plans.

In terms of business segments, Microsoft’s cloud-focused division outperformed other units with a 20% increase in revenue to $25.88 billion for the quarter. Revenue from Office email suite and workplace products grew 13% to $19.25 billion while the personal computing business led by Windows and including Xbox saw a 19% growth to $16.89 billion.

The addition of Activision Blizzard had a significant impact on Microsoft’s Xbox-related revenue, which grew by 61% during the quarter.

Theoretically, analysts surveyed by FactSet Research expected lower revenue figures than what was reported for this quarter and are currently projecting slightly lower revenues for the January-March quarter.

As Microsoft continues to make strategic investments in artificial intelligence and other technologies, it remains well-positioned for future growth and innovation within various sectors including cloud computing and gaming.

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