Microsoft quarterly profit rises 20% as tech giant pushes to get customers using AI products

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Microsoft announced on Thursday that its profit went up by 20% for the January-March quarter as it focuses on using artificial intelligence (AI) to make workplaces more efficient.

The company made a net income of $21.93 billion, or $2.94 per share, which was better than what Wall Street expected.

In the same period, Microsoft’s revenue was $61.86 billion, up 17% from last year. Analysts thought it would be around $60.86 billion.

Microsoft is not very specific about how much money it makes from AI products, like its Copilot chatbot. But AI is a big part of its main businesses, like cloud computing and online services.

The revenue from Microsoft’s cloud computing business grew to $26.7 billion, up 21% from last year, while productivity services revenue rose 12% to $19.6 billion.

Businesses pay $30 per employee each month to add Copilot to their workplace subscription, which includes email and spreadsheets.

Some of Microsoft’s AI products rely on its partnership with OpenAI, the maker of ChatGPT. Microsoft also introduced new AI language models called Phi-3 and partnered with startups like France’s Mistral to offer various AI systems through its Azure cloud computing platform.

But some of these partnerships are being looked at closely by regulators in Europe and the U.S. over concerns about competition in the AI industry.

While Microsoft is pushing for an AI-driven future, it’s also facing challenges with its older computer services.

A federal cybersecurity safety board recently criticized Microsoft for letting state-backed Chinese cyber operators break into email accounts of senior U.S. officials. The report said Microsoft’s security culture needs improvement.

Microsoft’s personal computing business, which includes licensing its Windows operating system, made $15.6 billion for the quarter, up 17% from last year.

After the announcement, Microsoft’s stock went up about 4% in after-hours trading on Thursday.

Microsoft said it plans to spend more money in the coming months to build and run AI systems as there’s a high demand for them.

“Near-term AI demand is a bit higher than our current capacity,” said Amy Hood, Microsoft’s chief financial officer, during an earnings call on Thursday.

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