Michelle ThompsonThe tech behemoth has become the second company in history to reach a stock market valuation of $3 trillion, surpassing Apple as the world’s most valuable.
Microsoft outperformed analyst estimates on Tuesday as its large bets on artificial intelligence paid off, notably for its Azure cloud computing subsidiary.
The software behemoth announced revenue of $62 billion, up 18% year on year, outperforming expectations of $61.1 billion. Year on year, its net income increased 33% to $21.9 billion.
Satya Nadella, CEO, stated, “We’ve moved from talking about AI to implementing AI at scale.” By incorporating AI into every tier of our technology stack, we’re gaining new clients and driving new benefits and productivity increases in every area.”
Microsoft Cloud revenue increased 24% year on year. According to the earnings report, revenue from the Xbox content and services sector jumped 61% as a result of the Activision Blizzard acquisition. Activision increased its overall revenue by 4%.
Microsoft, which recently surpassed Apple as the world’s most valuable firm, last week became only the second company in history to have a stock market valuation of $3 trillion.
Microsoft is regarded as a key participant in the field of artificial intelligence, thanks to its own initiatives and its close relations to ChatGPT producer OpenAI, of whom it is the largest stakeholder. In November, Microsoft CEO Satya Nadella played a crucial role in re-appointing Sam Altman as CEO of OpenAI following his stunning resignation. Microsoft has an observer seat on OpenAI’s board.
“The company’s recent financial performance, marked by a remarkable 18% revenue surge in today’s earnings release, signals a potent blend of innovation and strategic foresight,” stated Insider Intelligence/eMarketer senior director of briefings, Jeremy Goldman. “While peers like Alphabet and Meta navigate the AI landscape, Microsoft is firmly establishing itself as a frontrunner in the AI race.”
Microsoft’s influence on AI development has increased so rapidly that policymakers and many outside the tech industry have expressed concern. Investors dismissed concerns about the mounting headwinds as shares surged 10% in the past month.
The US Federal Trade Commission revealed last week that it has launched an inquiry into the company’s $10 billion investment in OpenAI, as well as transactions involving Google, Amazon, and AI firm Anthropic. The United Kingdom’s Competition and Markets Authority is also investigating the transaction. European Union officials have stated that they may launch similar inquiries. In early December, the New York Times filed a lawsuit against OpenAI and Microsoft, citing ChatGPT’s copyright infringement.
This quarter is also the first time Microsoft has reported earnings with Activision Blizzard, the A-list gaming company behind successes like Call of Duty and World of Warcraft, under its umbrella. After a lengthy back-and-forth with authorities, Microsoft completed its $69 billion acquisition of the video game producer in October.
Microsoft cut off 1,900 people from its gaming division last week, citing redundancies across the two companies, including Activision staffers and some working on the Xbox device.
Emily Martinez
