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Microsoft’s cloud business continues to make money,  revenue up by 52%

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Washington, D.C: Microsoft Corp. released earnings on Tuesday that indicated some resilience in the face of a sluggish economy.

These results were supported by the cloud business, which exceeded Wall Street projections for the end of 2022 but may fall short of forecasts for the current quarter.

Cloud revenue in the fiscal second quarter, which was published on Tuesday, made up for some loss in the PC section, allaying concerns that the lucrative cloud segment for major IT companies may be struck hard as consumers sought to cut spending.

Microsoft said last week, it eliminated nearly 10,000 employees, joining other major computer corporations in resorting to layoffs to weather tougher times. It reported fiscal second-quarter results that were higher than expected by Wall Street.

After ChatGPT, an AI-powered chatbot that uses plain English to provide generic answers to inquiries, became a viral hit, the cloud industry came back into the limelight. The bot was developed by the firm OpenAI, in whom Microsoft has made significant investments and which is in need of intensive cloud computing services.

In reference to OpenAI, Brett Iversen, Microsoft’s head of investor relations, stated that the company might use the technology in a number of ways, either to create new products or to enhance those that already exist. He predicted that future income for Microsoft’s Azure cloud service will come from ventures tied to OpenAI.

Chief Executive Satya Nadella stated it was too early to distinguish the impact of AI from the workloads on the Azure cloud during the results call.

Revenue from Azure cloud products increased 31% in the second quarter, as predicted by Visible Alpha’s projections. It has progressively surpassed industry leader Amazon.com Inc.’s Amazon Web Services in terms of market share (AWS).

According to Refinitiv IBES, Microsoft’s revenue increased 2% to $52.7 billion in the three months ending December 31 compared to the average analyst forecast of $52.94 billion.

Despite a 12% decline in net income to $16.4 billion, adjusted income of $2.32 per share, as calculated by Refinitiv, exceeded Wall Street’s average forecast of $2.29.

As the PC market continued to contract, sales at Microsoft’s More Personal Computing segment—which includes Windows, devices, and search revenue—fell 19% to $14.2 billion.

The business projects that revenue will fall to between $11.9 billion and $12.3 billion in the current fiscal third quarter.

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