In a rare disclosure about the scale of Azure, he said that revenue from Microsoft’s cloud business had climbed to US$111 billion ($178.5b) in the fiscal year that ended in June, with Azure accounting for more than 50 per cent for the first time. Microsoft, which seized a head start in generative AI thanks to its long relationship with OpenAI, said the new technology had added 1 percentage point to the growth of its Azure cloud platform in the latest quarter and would add 2 points in the current period.Ĭhief executive Satya Nadella called these “material numbers”, given the large size of Microsoft’s cloud business. Facing a barrage of questions from Wall Street, however, executives at both companies stopped short of putting a figure on the capital spending binge to come, or predicting how strong the revenue uplift from AI might be. Microsoft’s stock, which had risen a similar amount as Big Tech’s share price surge accounted for most of Wall Street’s advance this year, fell back nearly 4 per cent on profit-taking.īoth companies pointed to higher spending in the coming quarters as they build out the data centres needed to support an expected boom in demand for new generative AI services. The news lifted Google’s shares by 6 per cent in after-market trading, taking their gain this year to 46 per cent. A rare round of job cuts that swept through the biggest tech companies early this year also boosted profit margins. The recovery in Google’s digital advertising operations, along with a solid performance in Microsoft’s cloud business at a time when many customers are looking to streamline spending because of economic uncertainty, lifted the companies’ revenue above Wall Street’s expectations. Microsoft and Alphabet, Google’s parent, reported greater resilience than expected in their core businesses in the second quarter, helping to underpin Big Tech’s recent stock price gains as both companies cautioned about higher AI spending ahead. Despite the coming spending binge on AI, Google and Microsoft both promised careful attention to costs after recent job cuts.
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