Microsoft's latest quarterly filing highlights significant growth in its cloud revenue, surpassing $40bn for the first time, with AI revenue reaching a remarkable $13bn. CEO Satya Nadella emphasized the transition from proof-of-concept AI applications to widespread enterprise use, indicating a strong demand for AI solutions. However, challenges remain, as scaling AI infrastructure is affecting profit margins. The need for modern AI-optimized hardware is crucial, as Nadella pointed out the careful balance between rapid technological advancements and maintaining an effective upgrade strategy.
You don't want to buy too much of anything at one time. Because of Moore's Law, every year is going to give you 2x [performance improvement]. Your [software] optimisation is going to give you 10x.
Enterprises are beginning to move from proof-of-concepts to enterprise-wide deployments to unlock the full ROI [return on investment] of AI.
AI business has now surpassed an annual revenue run rate of $13bn, up 175% year-over-year.
Microsoft Cloud margins are down year-over-year driven by "the impact of scaling our AI infrastructure".
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