- Microsoft’s quarterly revenue increased 17% to $81.3 billion, with Microsoft Cloud revenue accounting for 63% of this.
- Investors are concerned about manufacturers’ overreliance on AI models, OpenAI and CapEx
- Nvidia still plays a role in Microsoft’s plans for the future
Microsoft has posted a 17% year-over-year increase in quarterly revenue ($81.3 billion), but despite this success, it appears investors are concerned about bigger things at stake than just the company’s finances.
Share prices actually fell 6% in after-hours trading, with investors likely concerned about Microsoft’s heavy reliance on AI model makers and huge capital expenditure.
And even though Microsoft lost its right of first refusal as OpenAI’s computing supplier, the company is still strongly tied to the ChatGPT maker in more ways than one, adding to the pressure it faces to win investors’ trust.
Microsoft’s revenue rises, but stock prices fall
In its earnings release, Microsoft admitted that its remaining business performance obligation increased 110% to $625 billion.
Nearly half (45%) of this is tied to OpenAI after OpenAI set out plans to purchase an additional $250 billion in Azure services, and Microsoft CFO Amy Hood emphasized that the remaining 55% of its backlog is spread across multiple industries, geographies and customers, and is not related to OpenAI.
Still, Hood praised the performance of Microsoft Cloud, which has now reached the $50 billion mark in quarterly revenue; In other words, the department is now responsible for almost two-thirds (63%) of the company’s total revenue.
“We are only in the beginning phases of AI deployment and Microsoft has already built an AI business that is larger than some of our largest franchises,” said CEO Satya Nadella. “We are pushing the envelope across our entire AI stack to drive new value for our customers and partners.”
During its most recent quarter, Microsoft’s CapEx reached $37.5 billion, or nearly half (46%) of its total revenue, with an estimated two-thirds spent on GPUs and CPUs, Hood explained on the call.
Microsoft also hinted at a continued reliance on Nvidia chips despite internal efforts with its own Maia hardware. Nvidia shares have stalled in recent weeks on concerns about an imminent bursting of the AI bubble and increased activity from its customers producing their own chips.
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