Regardless of what the future holds for AI, the current situation remains very good for Microsoft. The tech giant announced yet another quarterly revenue record on Wednesday. That was $92.3 billion, up 19% year over year.
Microsoft has now reported record earnings for 10 consecutive quarters.
This is also a useful income. Microsoft reported net income of $36.6 billion, an increase of 32% year over year on a GAAP basis.
Microsoft said the record revenue was primarily due to strong performance in Microsoft Cloud, with revenue reaching $63.9 billion in the quarter, a 30% increase from the same period last year.
Microsoft has reorganized its business reporting into two basic segments: 1) Agents and Infrastructure and 2) Devices and Consumers. Meanwhile, Devices and Consumer segment revenue was $15.5 billion, down 3%, and Windows OEM and Devices revenue was down 22% from the year-ago period.
To be sure, not all of Microsoft’s healthy cloud revenue can be attributed to AI. Microsoft 365 accounted for nearly $28 billion. However, Azure brought in the most revenue at $33.2 billion. Again, not all of that is necessarily related to AI. Businesses run all kinds of traditional software and SaaS applications on Azure.
Still, a significant portion of the revenue came from AI, as Microsoft reported $10 billion in revenue from OpenAI. Even though OpenAI has moved into AWS, Oracle, and more, it still runs many of its services on Microsoft’s cloud. (Anthropic also runs on Azure.) Microsoft also said its “remaining commercial performance obligations increased 73% to $677 billion.” This represents future revenue promised under AI Lab’s existing contract.
But like all major cloud providers, Microsoft is spending a lot of money preparing to deliver on these promises. Capital spending exceeded $45.2 billion, also a record high for the quarter.
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