Microsoft beats Wall Street expectations with $81.3B revenue

Microsoft beats Wall Street expectations on revenue as AI push continues

Microsoft said Wednesday that its revenue for the October-December quarter was $81.3 billion, up 17% from the same period a year earlier, as the company continued its effort to expand global adoption of its artificial intelligence tools.

The company reported net profit for the quarter of $30.9 billion, or $4.14 per share, and said those results beat Wall Street expectations. Microsoft’s figures, as described in the report, excluded the impact of the company’s investments in OpenAI.

Wall Street expected Microsoft to earn $3.91 per share on revenue of $80.31 billion for the quarter, according to analysts surveyed by FactSet Research. Microsoft’s profit was higher than that forecast at $38.5 billion, or $5.16 per share, when the company’s earnings were presented without incorporating its OpenAI investments, reflecting what Microsoft said was a new accounting practice the company would use going forward.

Those investments were tied to OpenAI’s restructuring last year. Microsoft had a roughly 27% stake in OpenAI, or about $135 billion, as the startup converted from a nonprofit into a new for-profit public benefit corporation.

The report also described how Microsoft’s relationship with OpenAI has evolved. While Microsoft is no longer OpenAI’s exclusive cloud provider, Microsoft said it would retain commercial rights to OpenAI products through 2032.

Microsoft said sales from its AI-focused cloud computing business segment were $32.9 billion for the last three months of the year, up 29% from the same time last year and above analysts’ expectation of $32.4 billion, based on a FactSet survey.

Despite the earnings beat, Microsoft stock dropped nearly 5% in after-hours trading after the company released its results. Zacks Investment Research analyst Bryan Hayes said the dip likely reflected “investor scrutiny” over Microsoft’s spending on the infrastructure of computer chips and data centers needed to power AI.

On an earnings call, Microsoft CEO Satya Nadella said the company is still in the “beginning stages” of AI diffusion, describing diffusion as the spreading of AI usage across a variety of sectors.