But strong growth in the cloud business has eased concerns about the company's bet on artificial intelligence and offset revenue losses in the company's consumer business. Microsoft expects capital expenditures to reach US$190 billion this year, an increase of 61% from last year, and second-quarter revenue to increase by 13%-15%.
According to Microsoft’s just-released first-quarter financial report, Xbox hardware sales revenue fell by 33%, and Xbox content and services revenue fell by 5%. The company's quarterly revenue reached US$82.9 billion, a year-on-year increase of 18%, and net profit was US$31.8 billion. All key indicators exceeded expectations.
Among them, cloud business revenue reached US$54.5 billion, a year-on-year increase of 29%; Copilot attracted 20 million paid users, an increase of 33% from January, and Azure cloud computing increased by 40%, in line with expectations; quarterly capital expenditures were US$31.9 billion, 8% lower than expected.
Microsoft this week renegotiated its agreement with OpenAI, giving it more freedom to accept investments from Microsoft's competitors while reducing the amount of revenue it must share with Microsoft. The two parties fought for several months before reaching an agreement, and it was widely rumored that OpenAI was considering suing to force the contract to be terminated.
As a competitor of Microsoft, Amazon's performance is even more impressive. The company's first-quarter revenue reached US$181.5 billion, far exceeding analysts' expectations.
Among them, the cloud computing business represented by AWS increased by 28% year-on-year to US$37.6 billion, advertising service revenue increased by 24% to US$17.2 billion, and subscription services increased by 15% to US$13.4 billion. In terms of retail, e-commerce sales were US$64.3 billion, physical store sales were US$5.8 billion, and third-party seller service revenue was US$41.6 billion.
Amazon's previous forecast of earnings per share was US$165 million, which was revised to US$2.78 per share. The company's revenue from April to June is expected to reach US$194 billion to US$199 billion, a year-on-year increase of 16% or even 19%. The company's Prime Day event is not scheduled until June of the second quarter.
What is even more unimaginable is that the chips designed by Amazon have become its main business. Chip sales revenue has reached 20 billion US dollars, an increase of three digits. Meta has stated that it will purchase millions of Amazon Graviton processors.
The price is that capital expenditures surged to US$43.2 billion in the first quarter, and capital expenditures for the full year will reach US$200 billion, a year-on-year increase of 60%; the company's free cash flow dropped to a low of US$1.2 billion, while there was still US$25.9 billion in cash in the same period last year.
Company CEO Andy Jesse said that participants in the AI arms race are very interested in Graviton processors, and buyers have requested to buy the entire inventory.
"The Rescue Plan", which was invested and filmed by Amazon, also achieved unprecedented box office results ($615 million). The company is investing heavily in the low-Earth orbit satellite communication network (LEO). In addition to spending US$11 billion to acquire satellite operator Globalstar, it is also accelerating the frequency of LEO satellite launches. Currently, 270 satellites have been deployed, and the long-term goal is 7,000 satellites.
