Microsoft Beats Financial Expectations Despite Worries About Economy2 min read
Microsoft said on Tuesday that its business had remained strong in its most recent quarter despite pressure from a slowing economy, with a 7 percent increase in revenue and a 9 percent jump in profit.
The company’s revenue was $52.9 billion, and it made $18.3 billion in profit in the quarter. Both exceeded Wall Street expectations.
Microsoft’s cloud business — which includes Azure, its cloud computing product, and its Microsoft 365 platform — powered the surprisingly resilient results, with $28.5 billion in revenue, up 22 percent from a year earlier.
Sales of Azure, a key metric watched by investors, grew 27 percent, which was in line with investors’ expectations. Still, that was a drop from a 46 percent increase the year before. Overall, the segment that the company calls Intelligent Cloud was up 16 percent from a year earlier, which was better than had been expected.
Microsoft’s cloud products are “certainly a very important engine for us going forward,” said James Ambrose, Microsoft’s director of investor relations.
Shares of Microsoft stock jumped as much as 5 percent in after-hours trading.
Microsoft, like many other technology companies, has been hindered by the sluggish economy after substantial growth during the pandemic. The company said in January that it would lay off 10,000 employees.
The company’s Windows business has slumped as the global market for personal computer sales has slowed. Revenue from Microsoft’s personal computing segment in its most recent quarter was $13.3 billion, a 9 percent decrease from a year earlier. Within that category, revenue from Windows OEM — original installations of Windows software on new computers — sank 28 percent, and devices revenue was down 30 percent.
Still, Microsoft’s stock has remained strong, buoyed in part by the company’s foray into the field of artificial intelligence.
Mr. Ambrose cautioned that the strong numbers did not necessarily suggest an improving macroeconomic environment. “I don’t know that it signals a major change in our view” of the economy, he said.
Microsoft is also poised to benefit from the boom in A.I. through its investment in OpenAI, the start-up behind the ChatGPT chatbot. It has already integrated ChatGPT into its Bing search engine, and the company has said it will incorporate A.I. into other Microsoft products as well.
In a statement, Satya Nadella, Microsoft’s chief executive, predicted that A.I. would spark “a new era of computing,” but the company said it was too early for the futuristic technology to affect its quarterly financial figures.
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