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Microsoft reports 33% rise in profit

Microsoft reports 33% rise in profit

Two weeks ago, Microsoft overtook Apple as the most valuable public company. Last week, its market valuation surpassed $3 trillion. Next week, Satya Nadella will celebrate his 10th anniversary as chief executive of the company.

For Microsoft, the pressure to keep delivering is on.

In particular, investors are looking to capitalize on the company as its leader in artificial intelligence. It has invested billions of dollars in OpenAI, the start-up behind the ChatGPT chatbot, and has spent the last year pushing its AI systems into every product it offers. Microsoft has told investors that AI won't start delivering meaningful results until this year, but investors have been looking for early signs of how much the hype will translate into sales.

On Tuesday, Microsoft signaled it was looking for a way forward, as it posted revenue and profits that beat Wall Street expectations.

Revenue for the three months ended in December was $62 billion, up 18 percent from a year earlier. Profit increased 33 percent to $21.9 billion.

“We have moved from talking about AI to implementing AI at scale,” Mr. Nadella said in a statement.

Microsoft's commercial cloud offerings generated revenue of roughly 24 percent to $33.7 billion.

Its flagship cloud computing product, Azure, grew 30 percent faster than in the previous three quarters.

Business subscriptions to Microsoft's cloud productivity suite, including Teams, Word and Excel, grew 17 percent.

Corporate customers have just started trying out Microsoft's Copilot offering, which integrates AI tools into those productivity programs. Those upgrades became widely available in November and cost $30 per user per month, so even “modest” adoption of the offering could lead to a “meaningful” increase in the amount customers pay each month, according to Bank of America. analysts wrote in a recent note to investors.

The New York Times has sued Microsoft and its partner OpenAI for using copyrighted material to develop AI technologies. In an interview with “NBC Nightly News” that aired Tuesday evening, Mr. Nadella said it was clear that “you can't just use copyrighted material and reproduce it,” but he added that copyright The laws “now must be interpreted to reflect what constitutes 'new transformational technology,'” according to a transcript.

Gaming has become Microsoft's most important consumer business, and the results included the first quarter in which game publisher Activision Blizzard was part of Microsoft. After a year and a half of regulatory reviews around the world, the company closed a $69 billion deal to buy Activision in October.

Microsoft cut 1,900 jobs in its gaming division last week, most of which were brought on through employee acquisitions.

https://static01.nyt.com/images/2024/01/30/multimedia/30microsoft-vmzq/30microsoft-vmzq-facebookJumbo-v2.jpg

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