Microsoft on Wednesday reported an 11% increase in profit for the July-September quarter compared to the same time last year as investors looked for signs that the company’s huge spending on artificial intelligence is paying off.
The company reported quarterly net income of $24.7 billion, or $3.30 per share, which beat Wall Street expectations.
The Redmond, Washington-based software maker posted revenue of $65.6 billion in the quarter, up 16% from last year.
Analysts polled by FactSet Research were expecting Microsoft to earn $3.10 per share on revenue of $64.6 billion.
Microsoft doesn’t report revenue specifically from AI products but says it has infused the technology and its AI assistant, called Copilot, into all of its business segments, particularly its Azure cloud computing contracts.
Leading in sales for the quarter was Microsoft’s productivity business segment, which includes its Office suite of email and other workplace products, growing 12% to $28.3 billion.
Microsoft’s cloud-focused business segment grew 20% from the same time last year to $24.1 billion for the three months ending Sept. 30.
Its personal computing business, led by its Windows division, grew 17% to $13.2 billion. Microsoft and the computer makers that run its Windows operating system this year unveiled a new class of AI-imbued laptops as the company confronts heightened competition from Big Tech rivals in pitching generative AI technology that can compose documents, make images and serve as a lifelike personal assistant at work or home.
Building and operating AI systems is costly and Microsoft reported spending $20 billion over the quarter, mostly for its cloud computing and AI needs.
Microsoft CEO Satya Nadella in a statement Wednesday emphasized the company’s push to get customers applying AI platforms in their workplaces as AI transforms jobs and work tasks.
Nadella, now in his tenth year as CEO, saw his annual compensation increase 63% this year to $79 million, according to a statement filed ahead of Microsoft’s upcoming annual shareholder meeting in December. That’s despite Nadella offering to have his cash incentive reduced to reflect his personal accountability for handling cybersecurity threats.
Earlier this year, a scathing report by a federal review board found “a cascade of security failures” by Microsoft let Chinese state-backed hackers break into email accounts of senior U.S. officials.
