Microsoft reports rising revenues as investments in artificial intelligence pay off

Microsoft gave further signs on Thursday that its heavy investments in artificial intelligence were starting to pay off, reporting a 17% increase in revenue and a 20% increase in profits for the first three months of the year.

Revenue was $61.9 billion, up from $52.9 billion a year earlier. Profit reached $21.9 billion, up from $18.3 billion. The results exceeded Wall Street's expectations.

A year after Microsoft began pushing to put artificial intelligence into everything it does, the company said sales of its flagship cloud computing product, Azure, grew 31%. That included seven percentage points from its generative artificial intelligence services, which primarily sell access to technology developed by its partner OpenAI.

In recent quarters, Microsoft's AI push has helped it gain market share from Amazon, the leading cloud services provider. In January, the company said 53,000 customers were using its cloud AI services, of which a third were new to Azure.

Through its services, Microsoft is “orchestrating a new era of AI transformation, driving better business outcomes across every role and industry,” Satya Nadella, CEO, said in a statement.

This was the first full quarter that commercial customers could get a version of Microsoft's productivity suite with artificial intelligence tools, such as transcribing virtual meetings in Teams or summarizing documents in Word. While the company didn't say how many AI subscriptions — which cost $30 a month — it sold, commercial subscriptions grew 15%.

(The New York Times sued OpenAI and Microsoft in December, alleging copyright infringement of news content related to their AI systems.)

Microsoft has committed $13 billion to its partnership with OpenAI, the maker of the ChatGPT chatbot, and has built new data centers around the world to meet what it expects will be greater demand for artificial intelligence. The company spent $14 billion on capital expenditures and leasing in the first three months of the year, up from $11.5 billion in the previous quarter.

Games, Microsoft's biggest consumer product, grew 51% to $5.5 billion, with a big boost from its $69 billion acquisition of Activision Blizzard, the maker of Call of Duty and others successful games, in October.

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