Microsoft exceeded Wall Street forecasts for its fiscal first-quarter performance across the board, with its PC and cloud computing divisions expanding as more customers look forward to utilising its artificial intelligence products.
Additionally, much of its forecast exceeded analyst expectations.
Microsoft, which has supported and worked closely with OpenAI, has not yet released the majority of the products that are based on its collaboration with the developer of ChatGPT. However, corporate technology purchasers' enthusiasm for capabilities like the capacity to quickly finish lines of computer code or condense a tonne of email into a few bullet points contributed to the company's 13% increase in revenue to $56.5 billion in the quarter that ended on September 30. LSEG data shows that this contrasts with the analysts' consensus forecast of $54.52 billion.
"The results indicated that artificial intelligence products are stimulating sales and already contributing to top and bottom-line growth," said Jesse Cohen, senior analyst at Investing.com.
After hours trading saw a 3% increase in Microsoft shares.
Revenue from Microsoft's Intelligent Cloud division, which manages its Azure cloud computing platform—where a large portion of the AI work will be conducted—rose to $24.3 billion in the reporting quarter, exceeding analysts' estimates of $23.49 billion, according to LSEG data. Compared to a 26.2% growth prediction from market research firm Visible Alpha, Azure sales increased by 29%.
Microsoft's vice president of investor relations, Brett Iversen, stated that clients renewing their use of Microsoft's cloud in anticipation of employing AI services accounted for a large portion of the company's quarterly sales growth.
"What AI is doing ... is opening up either new conversations or extending existing conversations or getting us back in touch with customers that we maybe weren't doing as much with," Iversen told Reuters.
In contrast, the cloud subsidiary of Alphabet, the parent company of Google, missed revenue projections for the third quarter on Tuesday due to clients cutting back on spending due to the unstable economy and high borrowing rates.
"While a single quarter doesn’t a major trend make, this quarter’s cloud results from Microsoft and Google suggest that Azure is gaining share against its competition," said Bob O'Donnell, chief analyst at TECHnalysis Research. "It could be that Microsoft’s very strong messaging on their (AI) technology is getting companies to consider them in a more serious way."
Based on LSEG statistics, Microsoft reported a fiscal first-quarter profit of $2.99 per share, exceeding analyst projections of $2.65 per share.
"There are some weaker areas; search advertising revenues, for one, is growing slower than most segments," said Jeremy Goldman of research firm Insider Intelligence.
Microsoft reported a 10% growth in search and news advertising income, excluding traffic acquisition expenditures. The revenue amount for these operations is not broken out.
Microsoft is incorporating artificial intelligence (AI) into its own products. One example is the $30/month "Copilot" feature for Microsoft 365, which condenses a day's worth of emails into a brief update. Although the tool is now only available to a select group of test customers until it launches next month, using Copilot needs organisations to change some aspects of their Microsoft-based systems.
The amount Microsoft spends on the enormous data centres that support AI software is another area of interest to investors. Tuesday saw Microsoft announce that capital expenditures for the fiscal first quarter increased to $11.2 billion from $10.7 billion in the previous quarter, which was the highest amount since at least the fiscal year 2016. According to Microsoft executives, the corporation is expected to spend over $44 billion this fiscal year, with that sum expected to increase every quarter.
Data from LSEG shows that sales of its Windows operating system and other goods in the division increased to $13.7 billion, against the analysts' consensus forecast of $12.82 billion.
LSEG data shows that the category comprising the social network LinkedIn and its office productivity software increased to $18.6 billion, against the analysts' consensus expectation of $18.20 billion.
Visible Alpha reports that Microsoft projected an Azure growth rate of 26-27% in constant currency for its fiscal second quarter, surpassing analyst projections of 25.1%. According to LSEG statistics, the business predicted sales for the Azure-containing category of $25.1 billion to $25.4 billion, above projections of $24.94 billion.
LSEG data shows that Microsoft predicted fiscal second-quarter revenues in its Windows-based business division to be between $16.5 billion and $16.9 billion, surpassing predictions of $14.52 billion. It was not immediately obvious if analyst projections included the revenue from Microsoft's acquisition of Activision, even though it is included in the forecast.
Based on LSEG data, the company projected sales for the business sector that includes LinkedIn to be between $18.8 billion and $19.1 billion, primarily higher than the $18.83 billion expected.
(Source:www.reuters.com)
Additionally, much of its forecast exceeded analyst expectations.
Microsoft, which has supported and worked closely with OpenAI, has not yet released the majority of the products that are based on its collaboration with the developer of ChatGPT. However, corporate technology purchasers' enthusiasm for capabilities like the capacity to quickly finish lines of computer code or condense a tonne of email into a few bullet points contributed to the company's 13% increase in revenue to $56.5 billion in the quarter that ended on September 30. LSEG data shows that this contrasts with the analysts' consensus forecast of $54.52 billion.
"The results indicated that artificial intelligence products are stimulating sales and already contributing to top and bottom-line growth," said Jesse Cohen, senior analyst at Investing.com.
After hours trading saw a 3% increase in Microsoft shares.
Revenue from Microsoft's Intelligent Cloud division, which manages its Azure cloud computing platform—where a large portion of the AI work will be conducted—rose to $24.3 billion in the reporting quarter, exceeding analysts' estimates of $23.49 billion, according to LSEG data. Compared to a 26.2% growth prediction from market research firm Visible Alpha, Azure sales increased by 29%.
Microsoft's vice president of investor relations, Brett Iversen, stated that clients renewing their use of Microsoft's cloud in anticipation of employing AI services accounted for a large portion of the company's quarterly sales growth.
"What AI is doing ... is opening up either new conversations or extending existing conversations or getting us back in touch with customers that we maybe weren't doing as much with," Iversen told Reuters.
In contrast, the cloud subsidiary of Alphabet, the parent company of Google, missed revenue projections for the third quarter on Tuesday due to clients cutting back on spending due to the unstable economy and high borrowing rates.
"While a single quarter doesn’t a major trend make, this quarter’s cloud results from Microsoft and Google suggest that Azure is gaining share against its competition," said Bob O'Donnell, chief analyst at TECHnalysis Research. "It could be that Microsoft’s very strong messaging on their (AI) technology is getting companies to consider them in a more serious way."
Based on LSEG statistics, Microsoft reported a fiscal first-quarter profit of $2.99 per share, exceeding analyst projections of $2.65 per share.
"There are some weaker areas; search advertising revenues, for one, is growing slower than most segments," said Jeremy Goldman of research firm Insider Intelligence.
Microsoft reported a 10% growth in search and news advertising income, excluding traffic acquisition expenditures. The revenue amount for these operations is not broken out.
Microsoft is incorporating artificial intelligence (AI) into its own products. One example is the $30/month "Copilot" feature for Microsoft 365, which condenses a day's worth of emails into a brief update. Although the tool is now only available to a select group of test customers until it launches next month, using Copilot needs organisations to change some aspects of their Microsoft-based systems.
The amount Microsoft spends on the enormous data centres that support AI software is another area of interest to investors. Tuesday saw Microsoft announce that capital expenditures for the fiscal first quarter increased to $11.2 billion from $10.7 billion in the previous quarter, which was the highest amount since at least the fiscal year 2016. According to Microsoft executives, the corporation is expected to spend over $44 billion this fiscal year, with that sum expected to increase every quarter.
Data from LSEG shows that sales of its Windows operating system and other goods in the division increased to $13.7 billion, against the analysts' consensus forecast of $12.82 billion.
LSEG data shows that the category comprising the social network LinkedIn and its office productivity software increased to $18.6 billion, against the analysts' consensus expectation of $18.20 billion.
Visible Alpha reports that Microsoft projected an Azure growth rate of 26-27% in constant currency for its fiscal second quarter, surpassing analyst projections of 25.1%. According to LSEG statistics, the business predicted sales for the Azure-containing category of $25.1 billion to $25.4 billion, above projections of $24.94 billion.
LSEG data shows that Microsoft predicted fiscal second-quarter revenues in its Windows-based business division to be between $16.5 billion and $16.9 billion, surpassing predictions of $14.52 billion. It was not immediately obvious if analyst projections included the revenue from Microsoft's acquisition of Activision, even though it is included in the forecast.
Based on LSEG data, the company projected sales for the business sector that includes LinkedIn to be between $18.8 billion and $19.1 billion, primarily higher than the $18.83 billion expected.
(Source:www.reuters.com)