Microsoft experienced an acceleration in sales, due to the increasing demand for its AI tools
In the final months of 2023, Microsoft experienced an acceleration in sales, driven by the increasing demand for its artificial intelligence tools. The company reported an 18% year-on-year revenue growth, exceeding $60 billion from September to December. This announcement coincided with Microsoft surpassing Apple to become the world's most valuable publicly traded company, with a market value exceeding $3 trillion.
Microsoft CEO Satya Nadella highlighted the extensive deployment of AI "at scale" as a contributing factor to the company's success. The quarterly results reaffirmed Microsoft's position as a leading player in the technology sector, capitalizing on the expected growth driven by advancements in AI.
Microsoft's involvement with OpenAI, the creator of the ChatGPT bot, has been a notable aspect of its AI initiatives. However, this expansion has not been without controversy, as the New York Times is suing OpenAI and Microsoft, alleging copyright infringement in the training of ChatGPT.
Microsoft has integrated AI-assisted tools into its software, including tools for coding and other purposes. The introduction of Copilot, which can summarize meetings and assist with various tasks, has contributed to the company's success in attracting new customers. Sales of Microsoft's Azure cloud computing offerings, closely monitored by investors, rose 30% year-on-year, exceeding analysts' expectations.
The company's overall profits for the quarter increased by 33% year-on-year to $21.9 billion. Microsoft's strategy for artificial intelligence aligns with broader industry trends, as Alphabet, the parent company of Google and YouTube, also reported increased revenues and profits, attributing their success to investments in AI.
Despite their financial gains, both Microsoft and Alphabet have implemented workforce reductions. Google's headcount has decreased by approximately 5% since the previous year, with additional job cuts announced. Microsoft, after completing its acquisition of Activision Blizzard, announced plans to streamline its gaming unit, resulting in a 9% reduction (1,900 jobs) in that division.