Microsoft on Thursday reported a 17% increase in revenue and a 20% increase in profits in the first three months of this year, providing further signs that its heavy investments in artificial intelligence are starting to bear fruit.
Sales were $61.9 billion, up from $52.9 billion in the same period last year. Profits increased from $18.3 billion to $21.9 billion. The results exceeded Wall Street expectations.
A year after Microsoft began its efforts to bring AI into everything it does, the company announced a 31% increase in sales for its flagship cloud computing product, Azure. This includes his 7 percentage points from Generative AI Services, which primarily sells access to technology developed by his partner OpenAI.
In recent quarters, Microsoft's AI push has helped it gain market share from major cloud service provider Amazon. In January, the company announced that 53,000 customers are using its cloud AI service, and one-third of them are new to Azure.
Through its services, Microsoft is “orchestrating a new era of AI transformation, driving better business outcomes across every role and industry,” CEO Satya Nadella said in a statement.
This was the first quarter that a version of Microsoft's productivity suite with AI tools was available to commercial customers, including transcribing virtual meetings in Teams and summarizing documents in Word. The company did not disclose sales numbers for its $30-per-month AI subscriptions, but commercial subscriptions increased 15%.
(The New York Times sued OpenAI and Microsoft in December, alleging copyright infringement of news content related to the companies' AI systems.)
Microsoft has committed $13 billion to a partnership with OpenAI, maker of the ChatGPT chatbot, and is building new data centers around the world to meet the growing demand for AI. The company spent $14 billion on capital expenditures and leases in the first three months of this year, up from $11.5 billion in the previous quarter.
Games, Microsoft's most important consumer product, grew 51%, thanks in large part to its $69 billion acquisition in October of Activision Blizzard, the developer of blockbuster games such as “Call of Duty.” 5.5 billion dollars.