Microsoft's quarterly revenue hit its largest increase since 2022, thanks to demand for artificial intelligence products. However, the growth rate of the cloud business still disappointed some investors, and Microsoft's stock price fell after the market. Microsoft announced after the close on Tuesday that revenue for the second fiscal quarter ended December 31 increased 18% to $62 billion, with earnings per share of $2.93. Analysts on average expected earnings of $2.78 per share and revenue of $61.1 billion, according to data compiled by Bloomberg.
Azure cloud service revenue increased by 30%, slightly higher than the 29% growth in the previous quarter, and analysts' average forecast was for a growth of 28%.
Microsoft CEO Satya Nadella promised to build Microsoft into a giant in the field of artificial intelligence by working with OpenAI. Microsoft has released artificial intelligence Office software for enterprises. Cloud services that enable enterprise customers to build their own artificial intelligence applications on OpenAI's technology are also driving demand for Azure. However, given customer enthusiasm for the new tools and Microsoft's investment, some investors may hope for greater growth in Microsoft's cloud computing unit.
Microsoft said commercial cloud product revenue increased 24% to $33.7 billion. The company released the enterprise version of Microsoft 365 Copilot to large customers on November 1 last year, which is an artificial intelligence assistant for Office software such as Outlook, Word, PowerPoint and Teams. This month, Microsoft expanded the product to SMB customers and launched a consumer version that costs $20 per month.
Microsoft Chief Financial Officer Amy Hood said that customers' interest in artificial intelligence products will also prompt them to increase spending on basic services such as storage and computing power.