After Microsoft (MSFT) reported fiscal first-quarter profits that beat analysts’ expectations, Chief Financial Officer Amy Hood told investors on an earnings call that the company’s focus on artificial intelligence (AI) is Demand “continues to exceed our available capacity,” he said.
Microsoft’s Intelligent Cloud segment, which includes the Azure cloud computing platform, led the quarter’s growth. The division’s sales rose 20% year over year to $24.09 billion as demand for AI soared, but analysts had expected more.
Fastest growing business in Microsoft history
CEO Satya Nadella said usage of Azure’s Open AI services has more than doubled in the past six months, and Microsoft’s AI business is on track to reach an annual revenue runrate of $10 billion in the second quarter. “This will be our fastest business,” he said. The history of reaching this milestone. ”
“We are seeing AI driving fundamental changes in the business application market as customers move from legacy apps to AI-first business processes,” said Nadella.
Cloud growth may slow before recovering in late 2025
Hood said Microsoft expects intelligent cloud growth to slow to 18% to 20% in the second quarter, Azure growth to slow to 31% to 32%, and again in the second half of the fiscal year. He said he expected it to accelerate.
Microsoft’s stock price fell about 3% in after-hours trading after the earnings announcement. By Wednesday’s close, 2024 was up 15%.
