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Microsoft Reports Good Sales thanks to Efforts in Generative AI Boosting Revenue

CIO Insider Team | Wednesday, 25 October, 2023
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In its most recent quarter, Microsoft reported good sales indicating its efforts in generative AI were starting to boost revenue, demonstrating that its corporate clients have overcome their hesitations about making large purchases in the face of an uncertain economic climate.

Most notably by reversing the crucial cloud computing product's previously decreasing growth.

In the three months that ended in September, the company's sales increased 13 percent from the same period last year to $56.5 billion. Profit increased 27 percent to $22.3 billion. The results exceeded both Microsoft's own predictions and analyst expectations.

Microsoft has previously informed investors that meaningful outcomes from AI wouldn't occur until the beginning of 2024, when more products became broadly accessible. The company and its rivals are vying to include generative AI into almost every product they provide. Thanks to its cooperation with and $13 billion investment in the firm OpenAI, which unveiled the chatbot ChatGPT about a year ago, Microsoft is regarded by many businesses as a prominent provider of artificial intelligence (AI).

Azure, Microsoft's flagship cloud computing offering, saw a 29% increase in growth from the prior quarter. More than the company had anticipated, generative AI solutions accounted for about 3 percentage points of Azure's growth, including the access Microsoft gives to OpenAI's GPT-4 language model.

Microsoft's personal computing division only increased by three percent, to $13.7 billion, demonstrating how consumer habits have changed since the pandemic's rampant laptop purchases.

Over the previous year, businesses and other organizations that use cloud computing had been more frugal with their expenditures as they sought to reduce costs in the unsteady economy. Therefore, even as Microsoft and its rivals dove deeply into the next wave of AI, they had to contend with limited client budgets.

Sales of Microsoft's commercial cloud subscriptions for its Teams, Excel, and Word productivity suites accelerated and increased by 18 percent in the third quarter. Next month, business clients will be able to purchase these goods with Microsoft's "Copilot" generative AI integration, which the investment bank UBS called "easily the most anticipated GenAI-based software application launch."

Microsoft's personal computing division only increased by three percent, to $13.7 billion, demonstrating how consumer habits have changed since the pandemic's rampant laptop purchases. Windows operating system sales for brand-new PCs increased by four percent.

Microsoft also revealed last month that the Internal Revenue Service had concluded, following a ten-year examination, that the company owed $28.9 billion in unpaid taxes from 2004 to 2013. Microsoft's method of shifting revenues overseas has led to a dispute between the IRS and the firm. Microsoft announced that it was contesting the judgment, a procedure that may take years to complete.

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