Software maker Microsoft reported strong third-quarter earnings on Thursday, led in part by its AI technology and cloud businesses, it said in a statement.
Microsoft’s chief financial officer Amy Hood said that for the quarter Microsoft Cloud revenue, which includes commercial and consumer products, was “driven by strong execution [from] our sales teams and partners,” noting that it reached “$35.1 billion, up 23% year over year.” Microsoft 365 consumer subscribers grew to 80.8 million, according to its earnings report.
Shares of Microsoft were up 4% in after hours, trading at about $415 after it reported earnings that beat Wall Street’s expectations.
For the period, the software company generated revenue of $61.9 billion, about $2.94 earnings per share. Analysts had forecasted it to report $60.63 billion, roughly $2.81 earnings per share.
That boost in revenue may have been driven by its suite of AI systems, which it offers through its cloud computing platform Azure. “More than 65% of Fortune 500 companies now use Azure’s Open AI service,” Microsoft’s chief executive officer Satya Nadella told investors during the company’s earnings call.
The systems Microsoft offers include Copilot and Copilot stack. Figures for the tools, which can be used to create images and documents, are not included in the earnings report. The AI-assistant tool, however, has a subscription price of $30 a month, or $360 a year.
According to Microsoft’s Nadella, “Copilot and Copilot stack are orchestrating a new era of AI transformation, adding that they are “driving better business outcomes across every role and industry.” Microsoft’s AI products depend largely on its multi-billion investments with companies such as OpenAI and most recently Coca Cola.
“We continue to innovate and partner broadly to bring customers the best selection of Frontier and open source models,” Nadella told investors during the the earnings call.
Over in personal computing, Microsoft saw a boost in revenue from Xbox and gaming. Xbox content and services, which includes Xbox Game Pass, ballooned by 62% during the period, thanks in part to its acquisition of Activision Blizzard. Microsoft’s Hood said during the earnings call that the increase was primarily driven by Call of Duty purchases.
That’s despite revenue for devices declining by 17% in the third quarter. Sales for personal devices have largely faced challenges in the last year for Microsoft, even after it launched new Surface devices. But according to Microsoft’s Hood, that was because the company “remained focus on its higher margin premium products.”