Azure cloud delivers for Microsoft despite tough economic conditions – with artificial intelligence slated for future growth
Microsoft has pleased investors and Wall Street delivering a positive third quarter earnings report, despite the uncertain economic outlook.
The results from the cloud and software giant beat analyst expectations, and furthermore the expected decline from its Windows OS and Office units was less severe than had been forecast, despite the global decline in PC shipments.
Microsoft, like most other tech giants, has reacted quickly to the uncertain economic headwinds, when in January it confirmed it would axe 10,000 jobs, or roughly 5 percent of positions.
But digging down in the third quarter results from Microsoft, it is clear that Azure and its Office productivity software businesses continues to help the company thrive in the current economy.
The company also said artificial intelligence products were stimulating sales.
For the third quarter ending 31 March, Microsoft posted a 9 percent increase in net profit of $18.3bn, up from a net profit of $16.7bn in the same year-ago quarter.
This means that Microsoft profits were $2.45 per share in the fiscal third quarter, beating Wall Street estimates of $2.23, according to data from Refinitiv.
There was equally good news on the revenue front, as Q3 sales rose 7 percent to $52.8bn, up from $49.4bn a year earlier. Refinitiv had been expecting revenues of $51.02bn.
As a result Microsoft shares rose 8.3 percent in after-market trading.
And Microsoft was clear that AI would continue to help Microsoft going forward.
“The world’s most advanced AI models are coming together with the world’s most universal user interface – natural language – to create a new era of computing,” said Satya Nadella, chairman and CEO.
“Across the Microsoft Cloud, we are the platform of choice to help customers get the most value out of their digital spend and innovate for this next generation of AI.”
Microsoft said growth at its cloud business Azure was up 27 percent in the latest quarter, beating analyst expectations for 26.6 percent growth.
Revenue for Intelligent Cloud was $22.1 billion – an increased 16 percent; and server products and cloud services revenue increased 17 percent.
Analysts had been expecting that the gloomy PC shipment figures would impact Microsoft’s Windows business.
Microsoft posted revenues of $13.3 billion for its More Personal Computing division,- a decline of of 9 percent, but that was less severe than analysts had expected, after they had estimated sales of $12.19 billion.
Meanwhile Redmond’s productivity segment, which includes its Office software and advertising sales for LinkedIn, also beat analyst expectations with revenue up 11 percent at $17.5 billion, versus estimates of $16.99 billion.
Satya Nadella reportedly told investors on a conference call that Redmond had more than 2,500 Azure-OpenAI service customers, and said AI was integrated into a wide array of products.
Meanwhile its Bing search engine, which for years has struggled to gain traction against its search engine rival Google, reportedly has 100 million daily users and has seen downloads jump since the addition of AI features, Nadella reportedly said.