Microsoft concluded its first full fiscal year of robust investment in artificial intelligence with a blend of outcomes that intrigued observers concerned about the scale of tech giants’ A.I. spending.
Sales for the period spanning April through June reached $64.7 billion, marking a 15% increase from the corresponding period last year, as disclosed by the company on Tuesday. Profit also saw a 10% rise, reaching $22 billion.
The reported figures surpassed both Wall Street’s expectations and Microsoft’s own projections. However, the growth of the company’s cloud computing division fell short of investors’ anticipations, causing a more than 6% drop in its share price during after-hours trading.
Azure, Microsoft’s primary cloud computing offering encompassing A.I. services, experienced a 30% growth in the quarter, factoring in currency fluctuations. Investors had been anticipating a growth rate between 30% and 31%, aligning with Microsoft’s guidance.
The earnings report underscored Microsoft’s significant investments in building data centers and procuring advanced chips to power A.I. technologies. The company’s capital expenditures have risen consistently since late 2022 when CEO Satya Nadella urged top executives to make substantial A.I.-related investments. Microsoft’s capital spending in the last quarter amounted to nearly $19 billion, more than double the figure from two years prior.
Investor focus shifted towards Microsoft’s expenditure following Alphabet’s financial report, where Google’s parent company disclosed slowing growth and a 91% surge in capital expenses, triggering a sell-off in technology stocks the previous week.