Microsoft Reports $65.6 Billion in Quarterly Sales as AI Investments Raise Investor Questions

Microsoft has reported a 16% revenue growth for the July-September quarter, reaching $65.6 billion, alongside an 11% increase in net income to $24.7 billion. The quarterly results exceeded Wall Street expectations, with analysts forecasting $3.10 earnings per share on $64.6 billion in revenue. Microsoft posted $3.30 earnings per share.

The Redmond-based tech giant continues to ramp up spending on artificial intelligence, investing $20 billion over the quarter, primarily for AI and cloud computing development. Investors, however, are watching closely to determine if the company’s massive AI investments, particularly in its Azure cloud platform and Copilot AI assistant, are delivering measurable returns.

Microsoft has not separated revenue directly from AI products but highlighted AI’s integration into all segments of its business. Its productivity segment, which includes Office 365, led revenue with a 12% increase to $28.3 billion. The cloud-focused business grew by 20%, generating $24.1 billion, while the personal computing business, led by Windows, saw a 17% growth to $13.2 billion.

CEO Satya Nadella emphasized the transformative role of AI in workplace tasks and job functions, urging customers to adopt AI platforms. As Microsoft pushes the AI narrative, the company faces competition from other tech giants in the generative AI space.

Despite these advancements, the high cost of building AI systems continues to be a concern. Nadella’s annual compensation also saw a 63% increase to $79 million, despite cybersecurity issues raised earlier this year due to an attack by Chinese hackers targeting U.S. officials.

Key Takeaways:

  • Microsoft’s quarterly revenue grew 16% to $65.6 billion, surpassing analyst expectations.
  • The company invested $20 billion in AI and cloud computing, fueling investor questions on ROI.
  • Microsoft’s productivity and cloud businesses saw significant growth, with AI playing a key role in both segments.

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Qusai Ahmad is the founder of "Speak Accounting," a platform dedicated to simplifying Accounting and Excel for learners of all levels. Through insightful blog posts and comprehensive courses, Qusai Ahmad empowers individuals to master accounting principles and Excel skills with ease.