Microsoft reported $64.7 billion in revenue for Q2, a 15% year-over-year increase, and generated $22 billion in profits, up 10%. Despite these strong figures, shares fell over 3% post-trading due to underperformance in its cloud and AI services division, which did not meet analysts' expectations.
Cloud and AI Services
- Azure: Microsoft's cloud platform grew by 29%, falling short of market predictions.
- Generative AI: Microsoft has heavily invested in OpenAI, the creator of ChatGPT, positioning itself as a leader in the AI revolution.
- Capital Expenditures: CFO Amy Hood mentioned that demand for AI is outpacing current capabilities, leading to significant increases in capital expenditures.
Global AI Investments
- Microsoft announced over $15 billion in AI investments globally, focusing on building the necessary energy and technical infrastructure.
Personal Computing Division
- Revenue: The division reported nearly $16 billion in revenue, a 14% increase, driven by Windows OS and Xbox sales.
- Device Sales: Device sales decreased by 11% after a challenging year.
- AI PCs: The company is banking on "AI PCs" with generative AI capabilities integrated into Windows to drive future growth.
Despite better-than-expected results, Microsoft's stock fell, mirroring a similar reaction to Google's recent earnings report, where higher-than-expected spending led to a drop in share prices.
