Demand for AI helps Microsoft outperform financial expectations

Microsoft has beaten Wall Street expectations, posting better than expected revenues as its cloud computing and office software business grew amid increasing demand for artificial intelligence (AI).

Revenue rose to $56.2bn (£43.56bn) in the fourth quarter, the three months up to the end of June – up 8% on the same period a year ago. It is greater than the 7% expected by analysts.

The company chairman and chief executive, Satya Nadella, said Microsoft was “focused on leading the new AI platform shift”, as tech giants compete to develop AI products and companies seek to quickly adopt AI.

“Organisations are asking not only how – but how fast – they can apply this next generation of AI to address the biggest opportunities and challenges they face – safely and responsibly,” Mr Nadella said.

Investors and tech developers have been seeking to get a foothold in the burgeoning AI boom.

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AI now fluent in human language

Microsoft is one of the main competitors in the AI race. It invested in OpenAI, the maker of generative AI chatbot, ChatGPT.

It has also invested in its own products.

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In February it revealed a new Bing search engine powered by chatbot technology, gaining against rival Google.

The following month it announced an AI “copilot for work” that can write emails and allow users to catch up on skipped meetings.

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It is incorporating the ChatGPT-style assistant to all of its Office apps, including Word, Teams, and Outlook.

Microsoft’s AI platform, Azure, was behind the growth in cloud computing at the tech company.

Azure and other cloud services revenue grew 26% compared to a year before.

Despite the positive results, shares fell slightly as capital expenditure rose from $7.8bn (£6bn) the year before to $10.7bn (£8.29bn) to its building new data centres.

The stock price reached a record high last week as a $30 (£23.25) monthly subscription for generative AI features in its software was announced.

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