Microsoft shares jump after earnings, earnings miss

Microsoft ( MSFT ) reported quarterly earnings after the closing bell on Tuesday, beating analysts’ expectations for revenue and earnings per share. The tech giant reported revenue of $56.5 billion in the quarter, topping consensus estimates of $54.5 billion.

Adjusted earnings per share (EPS) came in at $2.99, compared to estimates of $2.66 per share. The company saw adjusted EPS of $2.35 in the same quarter last year.

Shares rose 3.6 percent in premarket trading Wednesday after Microsoft said higher-than-expected consumption of artificial intelligence boosted its cloud business.

Microsoft’s Intelligent Cloud division, which includes its Azure business, had revenue of $24.3 billion in the quarter. Wall Street was looking for revenue of $23.6 billion. Azure and other cloud services revenue rose 29 percent in the quarter, beating Wall Street expectations of 27 percent.

“With the help of pilots, we’re making the age of artificial intelligence a reality for people and businesses everywhere,” Microsoft CEO Satya Nadella said in a statement. “We are rapidly infusing AI at every layer of the technology stack and for every role and business process to drive productivity for our customers.

Meanwhile, the company’s productivity and business processes had revenue of $18.6 billion, while More Personal Computing had revenue of $13.7 billion, beating analysts’ expectations of $18.3 billion and $12.9 billion, respectively.

Microsoft has made AI a cornerstone of its business over the past year, announcing a massive $10 billion investment in ChatGPT developer OpenAI and unveiling AI-enhanced versions of its Bing search engine and Edge browser in February. .

Since then, the company has launched various AI-powered Copilot apps for Outlook, Windows 11 and Microsoft 365. The software can summarize emails, help you draft documents and PowerPoint presentations, and provide insight into Windows 11 features. Microsoft says it will combine Copilots into a single app in the future.

These investments help spark a new growth cycle for Microsoft as customers look to AI as a tool to streamline certain business processes and improve employee efficiency.

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In addition to its expanded focus on AI capabilities, Microsoft recently closed its $69 billion acquisition of Activision Blizzard. The deal is the largest in Microsoft’s history and makes it the third-largest video game company in the world, right behind Tencent and Sony. However, the Federal Trade Commission can still try to break up companies on antitrust grounds.

Daniel Hawley is the technology editor of Yahoo Finance. He has been covering the technology industry since 2011. You can follow him on Twitter @DanielHowley.

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