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Microsoft’s Q4 Earnings Call Shows Massive Investments Into AI

‘Users have engaged in more than 1 billion Bing chats and created more than 750 million images with Bing Image Creator’

Windows company Microsoft has shared its earnings conference call for Q4 2023 which shows the software maker made a staggering $56.2 billion in revenue and a net income of $20.1 billion during Q4. 

The company’s revenue is up 8 per cent and net income has increased by 20 per cent in that time. After having a fine close to its fiscal year, Microsoft Cloud surpassed $110 billion in annual revenue, up 27% in constant currency with Azure all of which account for more than 50% of the total for the first time.

During the earnings call, Microsoft CEO Satya Nadella says customers are asking, “How fast they can apply next-generation AI to address the biggest opportunities and challenges they face and to do so safely and responsibly.” 

Microsoft’s AI offerings

“We remain focused on three key priorities: first, helping customers use the breadth and depth of Microsoft Cloud to get the most value on to their spend; second, investing to lead in the new AI platform shift by infusing AI across every layer of the tech stack; and third, driving operating leverage,” said Nadella. 

The company has also seen increased momentum with its Azure Arc, which now boasts 18,000 customers and up to 150% year over year. Nadella says, “Azure AI is ushering in new born-in-the-cloud AI-first workloads with the best selection of frontier and open models.” 

As part of its growth, Mercedes-Benz is utilising the company’s Azure to bring ChatGPT to more than 900,000 vehicles in the US, making its in-car voice assistant more intuitive.

“Every AI app starts with data and having a comprehensive data and analytics platform is more important than ever,” says Nadella, adding that Microsoft Fabric will unify compute storage and governance with a disruptive business model. 

As for developers, Nadella says the new Azure AI Studio, “Is becoming the tool of choice for AI development in this new era, helping organisations ground, fine-tune, evaluate and deploy models – and do so responsibly.” 

“We’re also applying AI across low-code, no-code toolchain to help domain experts, automate workflows, create apps and web pages, build virtual agents or analyse data using just natural language.”

Nadella adds that, “Users have engaged in more than 1 billion Bing chats and created more than 750 million images with Bing Image Creator.” 

Windows and gaming 

Throughout Microsoft’s fiscal year for 2023, the company’s Windows and devices revenue has faced challenges compared to fiscal 2022. Windows OEM revenue, which PC manufacturers pay to use Windows on their devices, has experienced a continuous decline over the four quarters of the fiscal year. In Q4, Windows OEM revenue fell by 12 per cent, largely attributed to a decline in the PC market.

Microsoft’s overall device revenue has witnessed a decline of 20 per cent. During the earnings call, Microsoft CFO Amy Hood cautioned that they expect the next quarter to be even more challenging.

The CFO states that last year, the number of devices running Windows 11 has doubled and the company is transforming how people experience Windows as it becomes a new canvas in this era of AI.

Hood provided some insights on the company’s Q1 2024 fiscal gaming performance. She projected that Xbox content and services revenue would increase in the “mid to high single digits,” and overall gaming revenue would rise in the “mid-single digits,” but did not give specific details for Xbox hardware revenues during Q1 2024 fiscal.

The Windows company hopes to finalise its Activision Blizzard acquisition deal by the end of its Q4 fiscal 2023 with a deadline currently set for October 18th. Nadella says, “We continue to work through the regulatory approval process and remain confident about getting the deal done.”

Written By

Isa Muhammad is a writer and video game journalist covering many aspects of entertainment media including the film industry. He's steadily writing his way to the sharp end of journalism and enjoys staying informed. If he's not reading, playing video games or catching up on his favourite TV series, then he's probably writing about them.

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