Microsoft's big bet on AI seems to be paying off
Since its launch of Copilot (formerly Bing Chat) in February last year, Microsoft has gone full-on artificial intelligence (AI). The company has infused AI across all parts of the tech stack, including enterprise, security, cloud, hardware, and more -- it seems to be paying off.
On Tuesday, Microsoft unveiled its second-quarter earnings. The revenue and earnings not only exceeded estimates but also significantly surpassed the numbers from the year before, with AI being a star of the growth.
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"We've moved from talking about AI to applying AI at scale," said Microsoft CEO Satya Nadella. "By infusing AI across every layer of our tech stack, we're winning new customers and helping drive new benefits and productivity gains across every sector."
Microsoft reported a revenue of $62 billion, an increase of 18% compared to the prior fiscal year, and a net income of $21.9 billion, reflecting a 33% increase.
Microsoft's Cloud revenue grew significantly, up 24% year-over-year at $33.7 billion. Azure and other cloud services grew 30%, and according to Nadella, AI has a lot to do with it.
"Azure again took share this quarter with our AI advantage," said Nadella on an earning call, according to a report.
Additionally, Office Commercial products also saw a revenue increase of 15%, driven by Office 365 Commercial revenue growth of 17%, according to the earnings report.
These results follow the company making Microsoft Copilot for Microsoft 365, an AI assistant for Microsoft 365 applications, generally available for enterprise customers on Nov. 1, 2023.
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Even though more time is needed to solely attribute the increase in revenue to that, it could be a factor, especially since the enterprise solution comes at a steep price of $30 per user per month.
Microsoft shows no signs of slowing down on the AI front, just this month unveiling its latest development, Copilot Pro, a supercharged subscription version of Copilot for users at $20 per month. There have also been reports of Microsoft and OpenAI looking into investing in a humanoid robot startup.