Microsoft Corp. stated that its profit for the October-December quarter jumped 33%, owing to significant investments in artificial intelligence technology.
Microsoft Corp. reported Tuesday that its profit for the October-December quarter increased 33%, thanks to large expenditures in artificial intelligence technology. The business stated that the increase was mostly due to growth in its cloud computing unit, where Microsoft invests the majority of its AI resources.
The business posted net profits for the quarter of $21.87 billion, or $2.93 per diluted share, exceeding Wall Street’s expectations of $2.79 per share. The Redmond, Washington-based software company reported revenue of $62.02 billion in the quarter, increasing 18% from $52.75 billion the prior year and exceeding forecasts.
“Microsoft is firmly establishing itself as the frontrunner in the AI race,” said Insider Intelligence’s director of briefings, Jeremy Goldman. In addition to other benefits, Goldman said that AI technology may help Microsoft increase its share of digital advertising. His firm predicts that Microsoft’s global ad revenues will increase by 12% this year to $14.93 billion, but that Google’s far larger ad business will grow by 10% during the same time period.
According to FactSet Research, analysts predict Microsoft will make $61.14 billion in sales for the January–March quarter, with a current projection of $60.97 billion. The findings are the first to include the finances of video-game developer Activision Blizzard, which Microsoft officially acquired on October 13 for $69 billion.
According to James Ambrose, Microsoft’s director of investor relations, the merger increased revenue growth by four percentage points. However, it reduced operational earnings by around $440 million due to purchase accounting adjustments, integration, and transaction charges, he said.
In after-hours trading, Microsoft shares fell about 2% to $400.86, but they ultimately regained much of their losses. Analysts believe investors were originally apprehensive about Microsoft’s sustained aggressive investment plans.
Microsoft’s cloud-focused business segment surpassed its other divisions, with sales rising 20% from the same period last year to $25.88 billion in the quarter.
Revenue from the company’s Office suite of email and other office products, as well as the LinkedIn professional social network, increased 13% to $19.25 billion during the quarter.
The Windows-led personal computer division, which includes the company’s Xbox video games and services, increased 19% to $16.89 billion. These numbers demonstrated the significant impact of adding Activision Blizzard to the sector. Microsoft’s Xbox-related revenues increased by 61% in the quarter, with the corporation attributing 55 percent of that increase to the acquisition of Activision, which is known for generating the tremendously lucrative Call of Duty franchise.
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