In an effort to provide investors with a more accurate picture of the contributions of artificial intelligence, Microsoft reorganized how it discloses results for its business units on Wednesday. Specifically, certain search and news advertising revenue was moved under the Azure cloud computing unit.
The company announced that rather than falling under the intelligent cloud division, revenue from the AI and voice technology services that its Nuance unit provides will now be categorized under its productivity business, which is home to the Office app suite. Microsoft said that the change will enable it to better match its reporting structure with the way its companies are run.
As a result, the business updated its projection for the July–September quarter and restated revenue growth at its divisions for the previous fiscal year.
Large IT firms, such as Google and Microsoft, are under pressure from investors to demonstrate the return on the billions of dollars they have been spending on AI technology.
The majority of businesses have not yet seen a significant return on their AI efforts, making Microsoft one of the few large corporations that include AI contributions in their quarterly results.
The manufacturer of Windows stated last month that even while overall business slowed, AI gave Azure a greater boost in the June quarter. Azure is expected to grow at a faster rate in the second half of fiscal 2025, according to Microsoft.
In the first quarter, the firm anticipates intelligent cloud revenue to range from $23.80 billion to $24.10 billion, up from its previous projections of $28.6 billion to $28.9 billion.
After the company relocated several units from the business to the productivity division, quarterly revenue at its personal computing segment is estimated to be between $12.25 billion and $12.65 billion, down from its earlier estimate of $14.9 billion and $15.3 billion.
Revenue from productivity and business processes is anticipated to range from $27.75 billion to $28.05 billion, up from the previous range of $20.3 billion to $20.6 billion.
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