Microsoft earnings present AI driving cloud companies income

Tech layoffs are happening—and Microsoft isn’t any exception. However Microsoft’s backside line is flourishing. Within the last three months ending Jan. 30, the company recorded revenue of $62.0 billion, up 18% from the identical interval final yr. The tech big’s cloud enterprise, which incorporates its Azure division, posted revenue of $25.9 billion, up 20%.

Earnings exceeded Wall Street expectations, however buyers appear to be unimpressed. Microsoft inventory was down 0.28% in after-hours buying and selling.

Microsoft faces stress to ship to buyers, who need to see how corporations are earning money on generative AI, the know-how that powers chatbots like Bing and ChatGPT.

“We’ve moved from speaking about AI to making use of AI at scale,” Satya Nadella, the CEO of Microsoft, in a statement. Just last quarter, Nadella stated, “With copilots, we’re making the age of AI actual for individuals and companies in every single place.” The change in language highlights the corporate’s confidence within the progress of Microsoft’s generative AI enterprise.

Microsoft’s cloud enterprise, which incorporates its Azure division, posted income of $25.9 billion, up 20%. The Azure AI platform homes massive language fashions from OpenAI, in addition to open-sourced fashions reminiscent of Meta and Hugging Face, which prospects can use to construct their very own AI purposes.

Within the final 12 months, the corporate added 53,000 Azure AI fashions, Nadella stated on a convention name with analysts and buyers. Greater than half of the Fortune 500 corporations use Azure AI fashions immediately, he added.

The earnings come as layoffs have been plaguing the tech industry. Headcount on the finish of December was down 2% in comparison with final yr, in keeping with Amy Hood, the corporate’s CFO.

Microsoft sees AI assistants as an actual enterprise

Income development of Workplace 365 industrial income can be up 17%. Microsoft final yr made waves in saying numerous AI assistants referred to as “copilots,” which grew to become broadly out there beginning Nov. 1. The thought is that staff will be capable to have an AI assistant that helps them draft up emails and sum up notes. The corporate has priced its AI assistant at $30 per consumer per 30 days, along with what companies already pay for Workplace merchandise.

For now, although, Microsoft executives say the preferred use case for these instruments is solely to summarize notes, suggesting that staff are nonetheless wading into new territory.