Microsoft sales top forecast, bolstered by cloud-computing growth

Microsoft posted its strongest sales increase in six quarters, bolstered by recovering cloud-computing growth amid demand for new artificial intelligence products that are prompting corporate customers to shift back into spending mode.

Revenue in the fiscal first quarter, which ended September 30, rose 13 per cent to $56.5 billion, topping analysts’ average projections. Profit was $2.99 a share, the software maker said in a statement Tuesday. Azure cloud-services sales gained 29 per cent, compared with 26 per cent growth in the previous quarter. The shares jumped more than 5 per cent in late trading.

Chief Executive Officer Satya Nadella is revamping the company’s entire product suite, including Office, Windows, search and security software, to add features based on OpenAI technology. The partnership has helped Microsoft lure corporate customers keen to use ChatGPT and other new technologies — which answer questions and generate content — in their own applications. The company, which already counts most businesses as clients of its productivity tools and operating systems, has also been testing a pricier, AI-enhanced version of its Office software.

“If we see stabilisation in Azure then the euphoria returns,” said Dan Morgan, senior portfolio manager at Synovus Trust. “Enterprise software within tech is probably one of the best spaces now and Microsoft looks pretty strong.”

The shares climbed as high as $351.95 in extended trading following the report, after closing at $330.53 at the close in New York. 

The stock fell 7.3 per cent in the three months ending in September, a steeper drop than the 3.6 per cent decline posted by the S&P 500 Index during that period.