Microsoft outperformed Wall Street predictions for second-quarter revenue on Tuesday, driven by increased attraction to its new AI features.
According to Reuters, Microsoft shares fell 1% in after-hours trading. They climbed 57% last year. Along with a rally in other tech stocks, including Alphabet and Nvidia, Microsoft helped fuel a 24% surge in the S&P 500 in 2023.
How Much Did Revenue Grow?
Revenue grew 18% to $62 billion in the quarter ended Dec. 31, compared with the average analyst estimate of $61.12 billion, according to LSEG data.
Revenue at Microsoft's Intelligent Cloud unit, which houses the Azure cloud computing platform, grew 20% to $25.9 billion. Sales of Azure, which Microsoft does not disclose a dollar figure for, grew 30%, compared with a 27.7% consensus estimate from Visible Alpha.
Investors are keeping a close eye on Microsoft's Azure and Office revenues to gauge the sales impact stemming from the company's substantial investment of tens of billions of dollars into data centers this year, all aimed at advancing generative AI.
Reuters previously reported Microsoft's shares have risen significantly this year, briefly making it the world's most valuable listed company, surpassing Apple. Investors are responding positively to Microsoft's focus on artificial intelligence and its strategic partnership with Silicon Valley startup OpenAI, the creator of ChatGPT.
Forbes also published Microsoft's blowout earnings on Tuesday, stating that the company tallied its best-ever quarterly revenue for its fifth quarter in a row - a stretch directly coinciding with an explosion in investor interest in artificial intelligence and Microsoft-backed OpenAI's debut of ChatGPT.
Per Forbes' report, Microsoft's $62 billion of sales in the three months ending last month topped average analyst estimates of $61.1 billion, according to FactSet, while its $2.93 earnings per share topped forecasts of $2.77.
The booming sales topped the prior quarter's record $56.5 billion, marking an 18% year-over-year increase.
Profits were slightly down last quarter, as the $21.9 billion in net income compared to the September quarter's $22.3 billion profit, but profits remained up about 30% on an annual basis.
Microsoft, headquartered in Washington, has seen a revival in its Wall Street standing, mainly attributed to its role as a frontrunner in the broader AI movement within the tech industry.
