Microsoft Corp.’s cloud-computing business and Office software fueled stronger-than-projected quarterly revenue growth, a sign that the company’s hefty investments in artificial intelligence are starting to pay off.
Sales in the first quarter, which ended Sept. 30, increased 16% to $65.6 billion, the company said in a statement Wednesday.
Profit rose to $3.30 a share. Analysts on average estimated sales of $64.5 billion and per-share earnings of $3.11, according to Bloomberg data.
The cloud computing division posted a 34% revenue gain in the quarter, adjusted for currency fluctuations, slowing slightly from the 35% growth in the previous period. Microsoft’s forecast had indicated a slowdown of about 2 percentage points from the June quarter, according to KeyBanc analysts.
Chief Executive Officer Satya Nadella has overhauled the software maker’s product line with AI models from partner OpenAI. He’s now seeking to recruit enough paying customers to the souped-up software and services to drive Microsoft’s growth for years to come. At the same time, corporations are tapping the company’s data-center capacity to power development of their own AI applications, buoying demand in its closely watched its Azure business.
“People are shifting from just talking about artificial intelligence and testing and piloting artificial intelligence to actually putting it into production,” said Jackson Ader, an analyst at Keybanc.
Microsoft shares gained about 1% in extended trading following the report.