Under the strong driving force of cloud computing business, Microsoft's quarterly revenue and profit have exceeded external expectations.
On Tuesday Eastern Time, Microsoft released its financial report for the second quarter of the 2024 fiscal year as of December 31. Microsoft's total revenue for the quarter increased by 18% year-on-year, reaching a record breaking $62 billion, higher than analyst expectations; Net profit increased significantly by 33% compared to the previous year, reaching $21.9 billion. This is also the strongest quarterly growth for the company since September 2021.
Microsoft is one of the first Silicon Valley giants to announce quarterly results this week.
In the past 12 months, Microsoft's stock price has soared by nearly 70%, successfully entering the $3 trillion club with a market value, replacing Apple as the world's number one. Several top investment bank analysts have raised Microsoft's rating, believing that the company's positioning and contribution in generative AI are "increasingly strong.".
However, perhaps due to investors' high expectations for the conversion of generative AI, Microsoft's stock price fell by 1% after the financial report was released.
Microsoft CEO Satya Nadella stated during the earnings conference call that increasing evidence suggests that artificial intelligence will play a significant role in job change.
This effect first affected Microsoft's cloud business. In the last quarter of 2023, Microsoft's cloud business grew by 20% year-on-year, reaching $25.9 billion, exceeding analyst expectations.
Due to the entire Wall Street observing whether Microsoft's heavy investment in OpenAI is beginning to translate into actual economic benefits, its cloud business revenue is naturally closely monitored by external investors. Microsoft has invested at least $13 billion in OpenAI since 2019 and is also the exclusive cloud service provider for the latter.
In response to external doubts, Microsoft stated that 6 percentage points of Azure's nearly 30% growth this quarter came from demand for artificial intelligence, which is double the contribution of artificial intelligence to Azure from the previous quarter.
In other noteworthy business areas, Windows revenue increased by 9% year-on-year, Office products and cloud services revenue increased by 15% year-on-year, while Office consumer business only grew by 5%.
It is worth noting that the quarterly revenue of professional social networking website LinkedIn increased by 9% compared to a year ago, reaching $4.2 billion, the highest revenue since Microsoft acquired the platform for $26 billion in 2016.
Microsoft's device business revenue decreased by 9%, including sales of Surface laptops, tablets, and other hardware. This indicates that Microsoft's application of AI has not yet benefited its hardware products.
Like large technology companies such as Google and Samsung that also released their financial reports today, AI has become a constantly mentioned keyword that may play a decisive role in their future development.
Nadella also made it clear that Microsoft has shifted from discussing artificial intelligence to applying it on a large scale.
He believes that Microsoft is continuously winning more customers through its diverse applications of artificial intelligence. This company currently has 53000 Azure artificial intelligence customers, of which more than one-third are new customers. GitHub Copilot (an AI programming tool jointly launched by Microsoft and OpenAI) also has over 1.3 million paying customers.
This technology giant has not provided the number of enterprise customers in the Microsoft 365 Copilot payment plan to the public, but there is considerable attention paid to this indicator involving actual AI conversion. Microsoft stated that this performance will be included in the company's Office Commercial product line, which saw a 15% increase in revenue for the quarter.
Microsoft CFO Amy Hood told analysts that although Microsoft 365 Copilot is still in its early stages, he expects future revenue to increase over time.
It is worth mentioning that video game developer Activision Blizzard, which Microsoft acquired for $69 billion last year, was also included in Microsoft's performance for the first time. This acquisition has enabled Microsoft's gaming business to surpass the Windows business that helped the company start for the first time.
This quarter, Microsoft's gaming revenue surged by 50%, reaching $7.1 billion, of which $2 billion contributed to revenue from Activision Blizzard. But the company also incurred a $437 million operating loss for Microsoft. As of now, the majority of the 1900 gaming department employees laid off by Microsoft are Activision Blizzard employees.