Microsoft posts strong quarter as revenue rises 18% to $77.7 billion, net profit jumps 22%
Microsoft announced its quarterly results and its revenue increased by 18 percent to $77.7 billion. The software maker also reported that quarterly profit rose 22 percent to $30.8 billion. Microsoft was expected to earn $3.67 per share on revenue of $75.38 billion, according to some analysts. However, according to quarterly results, it earned $77.7 billion.
Microsoft said in a statement that the quarterly results did not include the impact of its investment in artificial intelligence (AI) ChatGPT maker OpenAI during the period, adding that the adjustment was made to “clarify” how the $3 billion affected its core business.
The results came a day after a new deal with OpenAI boosted Microsoft’s valuation to $4 trillion for the second time this year.
Microsoft shares also rose 4 percent after reaching a $500 billion valuation agreement with OpenAI. However, there was a decline in the hours before it announced its earnings as an impact of the Azure outage.
What added to investors’ excitement on Tuesday was the announcement of Microsoft’s revised business agreement with its longtime partner OpenAI, maker of ChatGPT and currently the world’s most valuable startup.
While Microsoft is no longer OpenAI’s private cloud provider (a relationship that helped fund the startup’s early growth), it will retain commercial rights to OpenAI products through 2032 and have a roughly 27% stake in OpenAI’s new for-profit arm.
In July, Microsoft’s valuation surpassed $4 trillion after Nvidia reached that milestone. While Microsoft and Apple surpassed the $4 trillion mark for the first time this week, Nvidia reached a different milestone: the first $5 trillion company. Also Read | Meta’s third-quarter profits fell due to one-time $16 billion tax cuts related to Trump’s Big Beautiful Bill
Sky-high valuations highlight investor frenzy for AI; Some fear this could become a flop if AI products are not as transformative or profitable as promised. AI is costly to build and run, and Microsoft said it spent about $35 billion on capital expenditures to support AI and cloud demand in the July-September quarter, with nearly half of that on computer chips and most of the rest related to data center real estate.
Microsoft’s recent focus has been on introducing its flagship AI assistant Copilot to help with a variety of work tasks, and last week it gave it a new animated avatar skin called Mico.
