Microsoft profits soar, key cloud business slows
by AFP Staff Writers
New York (AFP) July 25, 2023

Microsoft's quarterly profits soared, the company said Tuesday, as its big push into artificial intelligence seemed to be bearing fruit but growth in its key cloud computing business slowed.

An earnings statement reported that net profit for Microsoft was $20.1 billion in the April to June period, up 20 percent year-on-year and above expectations.

The company posted $56.2 billion in sales for the quarter, which also beat expectations.

Even though its share price slipped in after-hours trading, the 48-year-old tech titan remains the world's second most valuable company after Apple, with a market capitalization of $2.6 trillion.

Microsoft shares had lifted off last week when the company said it would charge $30 extra per user to turbocharge its Microsoft 365 product -- which includes Word, Excel and Teams -- with AI powers.

This was an extra boost to a stellar year for Microsoft, whose big gamble on AI has so far been rewarded with a share price hike of about 45 percent this year.

The heart of the company's activity is the Azure cloud service, which competes with Amazon's AWS and Google Cloud to offer businesses their computing needs.

Demand for cloud computing slowed after a historic surge during the pandemic, and Microsoft and its rivals hope that the extra computing demands needed for AI will revive sales.

The tech giant said Azure and other cloud services saw revenue growth of 26 percent year-over-year, down slightly from the previous quarter.

Microsoft began 2023 with an announcement that it had entered into a close relationship with OpenAI, the company behind ChatGPT.

The Redmond, Washington-based company swiftly integrated ChatGPT's powers into its Bing search engine, breathing new life into a product which has been unable to compete with Google.

Microsoft has also pressed on with its big move to expand beyond its popular Xbox video game console by buying Activision Blizzard for $75 billion.

The deal has faced major regulatory scrutiny over competition concerns, but after an effort by US authorities to block the deal failed in court, the move looks likely to succeed.

Related Links
Satellite-based Internet technologies