Microsoft showed how great the global demand for computing power has become, thanks to dynamically developing projects related to artificial intelligence. Revenues at the Intelligent Cloud unit increased 19 percent in three months.
Artificial intelligence projects need enormous computing power. Microsoft managed to hit the market perfectly by providing a cloud computing service at an early stage. Effect? As of the end of September, revenues at the Intelligent Cloud unit were up 19 percent over three months.
Microsoft makes money on AI
For a company with a $2.5 trillion market capitalization to grow its largest segment of its business at such a pace is remarkable. This compares with Alphabet’s results, where Google search revenue grew 11 percent in the last quarter. Or Apple, where iPhone sales are growing at a rate of 2.5%.
The rapid expansion of the cloud meant that predictions of slowing growth across the company did not come true. Moreover, its existing investment in generative AI startup OpenAI has allowed it to add AI to its services while slowing R&D spending, which grew by less than 1 percent this quarter.
Before artificial intelligence, one of Microsoft’s biggest interests was gaming. After nearly two years of struggle, the $75 billion deal to buy Activision Blizzard has been approved by U.S. and British regulators. Currently, however, the largest transaction in the industry is no longer the apple of the technology giant’s eye.
Chief executive Satya Nadella left it at the end of his prepared speech to investors, who asked no further questions. The transaction contribution pales in comparison to the cloud. It will also take up a large portion of Microsoft’s $144 billion in cash, equivalents and short-term investments. Like the nearly $29 billion back tax bill sought by the U.S. Internal Revenue Service.