Microsoft Reports Big Profits Amid Massive AI Investments

Ars Technica's Samuel Axon reports on Microsoft's quarterly earnings: Some investors have been uneasy about the company's aggressive spending on AI, while others have demanded it. During this quarter, Microsoft reported that it spent $20 billion on capital expenditures, nearly double what it had spent during the same quarter last year. However, the company satisfied both groups of investors, as it revealed it has still been doing well in the short term amid those long-term investments. The fiscal quarter, which covered July through September, saw overall sales rise 16 percent year over year to $65.6 billion. Despite all that AI spending, profits were up 11 percent, too. The growth was largely driven by Azure and cloud services, which saw a 33 percent increase in revenue. The company attributed 12 percent of that to AI-related products and services.

Meanwhile, Microsoft's gaming division continued to challenge long-standing assumptions that hardware is king, with Xbox content and services posting 61 percent increased year-over-year revenue despite a 29 percent drop in hardware sales. [...] The company attributed 53 points of that to the recent $69 billion Activision acquisition.

Just goes to show...

[Anonymous Coward]

Microsoft customers will buy any old shit.

Re:

[Anonymous Coward]

They're renting new cloud shit though.

Just becomming a untility company

[will4]

Are any of the non-utility company parts of Microsoft even growing revenue?

The utility company parts are cloud computing and services and commodity AI services.

Yep

[gweihir]

Crap tech combined with aggressive marketing works on wayyy too many people.

Re:Yep FTFY

[zlives]

.."on wayyy too many" C-suite.

Re:

[gweihir]

That too, but not only. Unfortunately. If the morons were just the C-suites, something would change. But too many regular users have Stockholm Syndrome when it comes to Microsoft.

Re:

[zlives]

it is what they know and they don;t get paid enough to care

We found who is behind the AI scheme!

[ls671]

I guess we just found who is behind the AI scheme and hype! It makes sense that Microsoft is involved and profit from it! /s

Re:

[rsilvergun]

Google is claiming that they have replaced 25% of their programmers with AI. The CEO himself is saying it. He might be exaggerating but I doubt it's by all that much since his statements would have weight with investors and if he exaggerates too much he'd be in trouble with the SEC.

Re:

[Anonymous Coward]

you cant even fucking troll accurately. the story was just on the front page. google said 25% of it's code was ai generated. nothing about replacing 25% of the programmers.

Dude this isn't 1980

[rsilvergun]

Programmers aren't paid by the line anymore. You're splitting hairs out of desperation.

We have a massive industrial revolution going on and we're just pretending it's not happening because it's too scary to deal with the fallout from it.

Re:

[m00sh]

Google is claiming that they have replaced 25% of their programmers with AI. The CEO himself is saying it. He might be exaggerating but I doubt it's by all that much since his statements would have weight with investors and if he exaggerates too much he'd be in trouble with the SEC.

I drive 50% of the time I drive on autonomous mode with adas features (acc and lane keep). Doesn't mean 50% of the drivers can be replaced.

Also massive employee firing

[rsilvergun]

Don't forget all the firings. Remember companies don't hire because they've got lots of money they hire to meet demand. They're not job creators. Consumers are the job creators.

Re:

[Anonymous Coward]

Much of it was due to massive savings from terminating employees who refuse to RTO.

An artform, i guess

[ihavesaxwithcollies]

Some investors have been uneasy about the company's aggressive spending on AI, while others have demanded it.

The art of saying something, while saying absolutely nothing at all.

And many companies made profit off blockchain....

[Somervillain]

...how are they doing now? We're about to really find out of LLMs and Generative AI are all they're reported to be...Apple Intelligence is now in the hands of many users...for real-world usecases. Given MS's massive investment of time and money as well as their Azure investments, I am surprised, they are not beta-ing actual AI tools to optimize code for performance. After all, if the technology worked, why wouldn't they actually be building products with it?

Before posting this, I gave CoPilot a try with

Re:

[az-saguaro]

I am not a professional programmer, but your interesting post struck a chord with me, about what or how old or valid their training sets are.

I am in medicine, and I do a lot of graphic arts for fun. I have played around a little with MS Copilot Designer to generate images. It is certainly interesting, and at times you get reasonable or pleasing images. And, admittedly there is a ghee whiz factor that it can at least get an image "in the ballpark" with respect to the prompt.

Part of my playing with it is t

Re:

[zlives]

try using indian, and get a mix batch of indian and native american, its a hoot.

No One Said Hardware is King

[Luthair]

Whoever wrote this article is clueless, hardware has been generally sold at a loss in gaming.

Is that it?

[TraumaFox]

I'm not sure why I'm supposed to be impressed by 12% of a 33% growth in Azure (in its totality) at the cost of $20 Billion in CapEx, especially while OpenAI is still actively hemorrhaging billions annually. The optics of AI being "profitable" in the short term won't matter if they have to keep making these massive investments year over year while hiding the actual numbers inside of a product platform that would be considered entirely separate if not for Copilot being forcefully jammed into every aspect of i