How Microsoft’s investment in AI is stabilizing its cloud business

How Microsoft’s investment in AI is stabilizing its cloud business

ZDNet reported on an interesting constant from Microsoft CEO Satya Nadella. “We have more than 1 million paid Copilot users in more than 37,000 organizations that subscribe to Copilot for Business, with significant traction outside of the US.”

Microsoft’s quarterly results also showed “early signs that the company’s investments in generative AI are beginning to boost sales, most notably reversing what had been slowing growth for the company’s important cloud computing product,” the New York Times reported. (Alternate URL here.)

The company generated sales of $56.5 billion in the three months ending in September, up 13% from the previous year. Profits reached $22.3 billion, an increase of 27%. The results exceeded analysts’ expectations and Microsoft’s own estimates.

Microsoft has told investors that artificial intelligence will not begin to achieve meaningful results until after the beginning of 2024, when more products become widely available. The company and its competitors are racing to put generative AI into nearly every product they offer. Many companies view Microsoft as a leading AI provider, thanks to its partnership with — and $13 billion investment in — startup OpenAI, which introduced the chatbot ChatGPT about a year ago. Microsoft’s leading cloud computing product, Azure, grew 29%, compared to 26% in the previous quarter. About three percentage points of Azure’s growth came from generative AI products, including Microsoft’s access to the OpenAI GPT-4 language model, more than the company asked investors to expect.

More than 18,000 organizations use Microsoft Azure OpenAI services, CEO Satya Nadella said in a call with investors. This includes customers who haven’t used Azure before, he said. “Azure has once again taken share as enterprises move their workloads to our cloud,” Mr. Nadella said. The company said that sales could increase by up to 8.7% in the current quarter, which exceeds investor expectations, and that it is investing in building data centers to support demand for artificial intelligence and cloud computing…

Microsoft’s personal computing business grew just 3%, to $13.7 billion, reflecting how consumer behaviors have shifted since the pandemic-driven laptop-buying frenzy. Revenue for Windows installed on new computers increased 4%. Gaming provided a bright spot for the consumer, with Xbox content and services up 13%.
Microsoft will next month integrate its Copilot AI product into its Excel/Word/Teams “productivity suite” — but Microsoft CEO Satya Nadella said 40% of Fortune 100 companies have already tested the feature during a “limited preview.” And so far, so good.

However, the article points out that it’s not all good news for Microsoft. Investment bank UBS told investors that although Microsoft has integrated an AI-powered chatbot into its Bing search engine, there is “no evidence” that Bing has actually gained any search market share.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *