Microsoft reported a 12% revenue growth in its latest quarterly results amounting to $69.6 billion, alongside a 17% operating income increase. Despite strong performance in its productivity and business segments, costs in the Intelligent Cloud division resulted in investor disappointment. CEO Satya Nadella highlighted significant advancements and a remarkable $13 billion annual revenue run for its AI initiatives. Analysts noted that inflated operating expenses in the cloud segment signify the costly challenge of sustaining growth amid intense AI competition and infrastructure investments.
Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year.
While Microsoft's topline earnings continue to rack up big gains as the result of its AI offerings, the company's Intelligent Cloud segment, which includes Azure and various other services, saw operating expenses spike 10%, a sign that maintaining AI momentum is getting expensive.
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