Microsoft surges on robust cloud growth, record AI spending

Bloomberg Matt Day Microsoft Corp disclosed it will spend more than billion in the current quarter to build out the evidence centers powering its artificial intelligence services Investors applauding accelerating upsurge in the company s cloud-computing unit sent the shares up sharply The closely watched Azure division posted a rise in sales during Microsoft s fiscal fourth quarter the company mentioned in a announcement on Wednesday Analysts projected a increase The company s forecast for improvement in the current quarter also exceeded analyst estimates Microsoft reported sales at the cloud division grew to more than billion during the year ended June the first time the company has disclosed a revenue figure for Azure which sells computing power and other services to businesses The results suggest that Microsoft perhaps the greater part prodigious spender of the AI age is starting to see a return in the form of rising sales Related Articles Magid UK Online Safety Act tougher than proposed U S law Meta stock surges after Q results blow past expectations despite heavy AI spending Forensic crime labs are buckling as new apparatus increases demand Trump administration is launching a new private soundness tracking system with Big Tech s help Review Giving the new Tesla Diner in Los Angeles a test drive The shares rose around in premarket trading on Thursday after closing at in New York gains that if they hold would give the company a domain capitalization of more than trillion The stock was up about this year through the Wednesday close On a call with analysts Microsoft Chief Executive Satya Nadella announced Copilot the chatbot the company markets to individuals businesses and coders has more than million monthly evolving users Particular million customers interact with the AI features scattered through Microsoft s products Nadella disclosed Microsoft Copilot is becoming the new way to organize work he reported referring to the company s main business-focused chatbot Last week Alphabet Inc s Google which boasts billions of users of its Android smartphone solution commented its Gemini AI assistant app had more than million monthly advancing users OpenAI s ChatGPT has million weekly ongoing users the company mentioned in March Even as Microsoft made new disclosures about its AI business the company abandoned its new practice of detailing what portion of Azure s advance was attributable to AI demand Jonathan Neilson a vice president of investor relations declared in an interview that such figures have become less relevant as use of AI-specific services like rentals of high-end graphics processing units increasingly spur customers to ramp up their use of other products like records storage or analytics Microsoft in the last insufficient years has deployed AI tools including those powered by OpenAI across its products betting that conversant chatbots and more powerful automation tool will boost sales of the company s productivity system and cloud services That s come at a steep cost as Microsoft races to construct enough evidence centers to meet surging demand for generative AI training and tools The Redmond Washington-based company s capital expenditures during the of late completed quarter billion were a record It won t stand for long Chief Financial Officer Amy Hood revealed the company would spend upwards of billion in the current quarter which would be at least more than the outlay during the same period a year earlier We will continue to invest against the expansive opportunity ahead Hood declared The quarter s strong increase in Azure could quell lingering investor concern over the company s elevated capital spending Bloomberg Intelligence analysts Anurag Rana and Andrew Girard wrote in a note We expect this to give Microsoft greater justification to invest more in its AI business with spending likely skewed heavier toward shorter-term assets like servers and GPUs The company s largest rivals in cloud services Amazon com Inc and Alphabet have also stated massive expansion plans During its earnings summary last week Alphabet disclosed robust demand for its AI services will require a crucial increase in capital spending Google s parent company mentioned capital expenditures will be billion or billion greater than an earlier forecast Amazon is scheduled to account quarterly earnings on Thursday and investors will be focused its own cloud results and capital spending Microsoft s overall sales rose to billion during the quarter Net income was a share Analysts on average estimated billion in revenue and per-share earnings of With assistance from Brody Ford Updates with premarket shares in the sixth paragraph More stories like this are available on bloomberg com Bloomberg L P