Microsoft reported profits of more than $36.6 billion (£27.5 billion) for the three months ending in September, just days after announcing plans to cut more than a quarter of its workforce. The strong results come as the technology giant commits billions of dollars to artificial intelligence (AI) infrastructure, while investors continue to question whether that level of spending can deliver sustainable returns.
Microsoft earnings rise alongside AI investment
The Windows developer said on Monday that it would buy out about 60,000 employees as part of efforts to reduce costs. At the same time, Microsoft is investing heavily in the infrastructure needed to support AI services, including data-centre capacity and other technology.
Microsoft shares rose about 2.9% in after-hours trading in New York on Wednesday following the results. Investors are examining the latest financial reports from major technology companies for signs of whether their substantial AI spending can be maintained.
Amazon, Meta and Alphabet, along with Microsoft and other major technology companies, are expected to spend more than $700 billion on infrastructure such as AI chips and data centres this year.
Cloud computing drives revenue growth
Microsoft said quarterly revenue increased 19% year over year to $92.3 billion, supported by strong growth in its cloud computing business. Revenue from Microsoft Cloud, the company’s enterprise technology service, rose 30%.
The company also identified risks that could affect its financial performance, including “significant investments” in AI. The spending comes amid continuing uncertainty over whether the expanding use of AI will generate returns large enough to justify the cost of the infrastructure required.
Microsoft CEO Satya Nadella said AI development had helped broaden adoption of the technology and was having a “real-world impact across every industry.”
Source: www.bbc.co.uk