Software giant warned of looming costs in the AI race that could dampen future growth as gen AI soaks up massive investments.
Microsoft stock MSFT stayed flat in off-hours trading after the company revealed its best quarter by revenue. The software juggernaut posted a record $62 billion in sales for the three months through December, an increase of 18%. Robust growth in its cloud business unit boosted the top line.
Elevated buzz about artificial intelligence lifted the company’s sales in Azure cloud division by 30%. But that same AI buzz is likely to take a toll on both the top line and the bottom line this year. Microsoft said it is gearing up to bet heavily on the hot tech in an effort to stay in the lead for all things AI.
Across other financials, net income for the backer of OpenAI’s ChatGPT jumped 33% to $21.9 billion. Earnings per share of $2.93 easily topped Wall Street estimates for $2.77. Shares of Microsoft were trading muted but the stock’s valuation of over $3 trillion is still ahead of the elbowed-out former champion by market cap Apple AAPL.