Microsoft It beat Wall Street estimates for first-quarter revenue and profit on Wednesday, as its efforts to increase data center capacity and demand for artificial intelligence boosted its cloud business.
Shares of the Redmond (Washington) company rose 1.3% in after-market trading.
“The transformation driven by AI is changing work, work artifacts and workflow across all roles, functions and business processes,” said Satya Nadella, president and CEO of Microsoft.
“We are expanding our opportunity and gaining new customers as we help them apply our platforms and AI tools to drive new growth and operating leverage.”
The quarterly earnings are Microsoft’s first since it restructured the way it reports on its businesses to align them more closely with how they are run. However, this change has made it difficult to estimate the quarter’s results.
The income of Azure they grew 33%, compared to Visible Alpha’s estimates of a 32 percent increase.
Earnings per share came in at $3.30, compared to analysts’ average estimate of $3.10, according to LSEG data.
Sales rose 16% to $65.6 billion in the fiscal first quarter ended in September, compared with analysts’ median estimate of $64.5 billion, according to LSEG.
Microsoft has been the big technology company that has performed the worst this year, with an increase of slightly more than 15%, while Goal is up 68% and Amazon is up 28%.
Considered a leader among Big Tech in the AI race, thanks to its early investment in OpenAI, the maker of ChatGPT, Microsoft has increased AI services across its product offering, helping to attract more customers.
The company said its unit’s market share gains Azure were powered by AI, as it has equipped the cloud computing platform with AI functions and models, including the latest o1 models from OpenAI, capable of answering difficult mathematical, scientific and coding problems.
The update has also helped increase average spend per customer.
Microsoft has been investing billions in building out its AI infrastructure and expanding its data center footprint to alleviate capacity constraints that have hampered it in meeting the surge in cloud computing demand.
The large investments have driven up the company’s capital spending in recent quarters, raising concerns among some investors.
The company will spend more than $80 billion this fiscal year, which began in July, according to estimates by analysts at Visible Alpha. This represents an increase of more than $30 billion compared to the last fiscal year.
For the quarter, Microsoft stated that capital expenditures increased 5.3% to $20 billion, up from $19 billion in the previous quarter. The figure exceeded Visible Alpha’s estimates of $19.23 billion.
