Microsoft flies with artificial intelligence

Led by artificial intelligence services, Microsoft beat market consensus last quarter and saw its shares rise more than 3% on a day of declines for markets and big tech.

Microsoft’s sales rose 13% in the latest quarter, with a focus on its Azure cloud division, which beat estimates and grew 28% year-over-year.

CEO Satya Nadella said the growth already reflects new AI products and services.

Azure customers can purchase access to AI models in the cloud or use the platform, which includes OpenAI tools, to develop and train their own AI systems.

According to Nadella, more than 18,000 customers access OpenAI programs through the Azure Open AI service.

Artificial intelligence services accounted for 3 percentage points of the division’s 28% growth, Bank of America said in a report.

According to the bank’s analysts, Copilot – an artificial intelligence tool that helps with tasks such as writing texts and creating presentations – will accelerate office sales in the coming quarters, that is, artificial intelligence services will also contribute to the results of this division.

The cloud segment accounts for nearly half of Microsoft’s total revenue, which totaled US$56.5 billion in the period, up 12%.

“Microsoft is flying. Operating profit grew by 25%, which is a very strong result for a company of this size,” said Leonardo Atero, partner at Arbor Capital, a manager specializing in foreign equities. “If I had to pick one stock to own, it would be Microsoft.”

The positive numbers crown Nadella’s strategy, which has returned Microsoft to the forefront of Big Techs thanks to successful acquisitions, such as an investment in the creator of ChatGPT, and a reorientation of the company’s business fronts.

Nadella took over in 2014, and since then the company has closed more than 300 M&As. The list includes GitHub, LinkedIn, Mojan Studios – the creator of Minecraft – and Activision Blizzard – the games Call of Duty, Guitar Hero and Candy Crush.

At today’s growth, Microsoft is worth US$2.53 trillion and the stock is valued at US$340.67, which is close to an all-time high 366 USD. The company saved itself in a day of widespread decline in technology companies. Amazon fell 5.6%, Nvidia lost 4.3% and Apple lost 1.4%. The Nasdaq index fell by 2.4%.

“Today is the time to feel sorry for the client,” said a manager who follows the technology sector.

Among the tech majors, the biggest decliner came from Alphabet, which posted lower-than-expected results on Tuesday. Shares fell 9.6% today.

Google’s ad revenue beat estimates, rising 12% in the quarter, its biggest gain in two years.

But heavy on numbers in the cloud business, which were seen as weak – a sign to analysts that the company is lagging behind in the artificial intelligence race.

Cloud revenue rose 22%, below the 25% consensus expected — and contrary to what was seen in Microsoft’s above-consensus results.

Thiago Kapulskis, a technology analyst at Itaú BBA, said the fall in shares in the sector was partly due to technical problems in the allocation of portfolios in the sector. In the specific case of Google’s parent company, he doesn’t see a trigger that justifies buying the stock.

“When the whole market goes down, investors have to hold on to some asset. Microsoft has historically been a safe haven,” Thiago said. “Good results for the quarter reinforce that.”