Microsoft has reported quarterly revenue that exceeded Wall Street expectations, driven by strong growth in its artificial intelligence and cloud computing businesses as the company continues to push for wider global adoption of AI tools.
The software giant said revenue for the October-to-December quarter reached $81.3 billion, an increase of 17% from the same period a year earlier. Net profit for the quarter totaled $30.9 billion, or $4.14 per share, surpassing analysts’ forecasts.
Wall Street had expected Microsoft to earn $3.91 per share on revenue of $80.31 billion, according to estimates compiled by FactSet.
According to AP, Microsoft said its reported earnings excluded the impact of its investments in OpenAI, the maker of ChatGPT. Under a new accounting method the company said it plans to use going forward, profit excluding those investments rose to $38.5 billion, or $5.16 per share.
The accounting change reflects OpenAI’s restructuring last year, when the startup — originally formed as a nonprofit — converted into a for-profit public benefit corporation. Microsoft held roughly a 27% stake in OpenAI, valued at about $135 billion, under the prior structure.
Although Microsoft is no longer OpenAI’s exclusive cloud provider — a partnership that helped finance OpenAI’s early growth — the company retains commercial rights to OpenAI’s products through 2032.
Microsoft’s cloud computing segment, which includes many of its AI-focused services, generated $32.9 billion in revenue during the quarter. That marked a 29% increase from a year earlier and exceeded the $32.4 billion analysts had projected.
Despite the stronger-than-expected results, Microsoft shares fell nearly 5% in after-hours trading following the earnings release.
Analysts attributed the pullback to investor concerns about the company’s escalating spending to support its AI ambitions. Those investments include advanced computer chips and massive data centers required to train and run large-scale AI models.
Bryan Hayes, an analyst at Zacks Investment Research, said the stock decline likely reflected heightened scrutiny of Microsoft’s capital expenditures rather than its underlying business performance.
On an earnings call with investors, Microsoft Chief Executive Satya Nadella said the company remains in the early stages of what he described as “AI diffusion,” referring to the spread of artificial intelligence tools across industries and business functions.
Nadella said demand for AI-powered software and cloud services continues to grow as customers experiment with and deploy new applications, but emphasized that adoption is still evolving.
Microsoft has been among the most aggressive technology companies investing in AI, embedding generative tools across products such as Office software, cloud services and developer platforms. While those efforts have fueled revenue growth, they have also required significant upfront spending, which investors are closely monitoring.
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