Microsoft reported strong sales in its latest quarter, indicating that corporate customers are adjusting to spending in the uncertain economy. The cloud computing division's sluggish growth was being reversed because to the company's efforts in generative artificial intelligence (A.I.). The company's September quarter revenues of $56.5 billion were up 13% year over year. The company's net income increased by 27% to $22.3 billion, smashing both Wall Street forecasts and Microsoft's own projections.
Microsoft promised its shareholders that artificial intelligence will begin yielding tangible results in the first few months of 2024, when additional products would become broadly available. The firm's relationship with OpenAI and $13 billion investment in the startup have positioned it as a frontrunner in the artificial intelligence (AI) market. The expansion of Azure accelerated to 29%, from 26% in the prior quarter. Microsoft's access to OpenAI's GPT-4 language model, among other generative A.I. technologies, contributed about 3% to Azure's expansion.
"With copilots, we are making the age of AI real for people and businesses everywhere," stated Microsoft CEO and Chairman Satya Nadella. "We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers." CFO and EVP Amy Hood stated, "Consistent execution by our sales teams and partners drove a strong start to the fiscal year with Microsoft Cloud revenue of $31.8 billion, up 24% (up 23% in constant currency) year-over-year."
Over 18,000 companies, many of which are new to Azure, use Microsoft's OpenAI services on Azure. The stock price of Microsoft rose by roughly 4 percent in extended trade. In addition to investing in data centers to accommodate demand for artificial intelligence and cloud computing, the company forecasted that sales might climb by as much as 8.7 percent in the coming quarter, which was well beyond investor forecasts.
Commercial cloud subscriptions for Microsoft's productivity suite (Excel, Word, and Teams) increased 18% year over year in Q3. Next month, commercial clients will begin to see these products with Microsoft's generative artificial intelligence "Copilot" integrated. Microsoft's PC division saw only a 3% increase, to $13.7 billion, as consumers altered their spending priorities in the wake of the pandemic.
