REDMOND, Wash. (AP) — Microsoft said Wednesday that its revenue for the October-December quarter was $81.3 billion, up 17% from the same time last year as it furthers its goal to expand global adoption of its artificial intelligence tools.
The company reported net profit for the quarter of $30.9 billion, or $4.14 per share, beating Wall Street expectations. Those results excluded the impact from Microsoft’s investments in ChatGPT maker OpenAI.
Microsoft was expected to earn $3.91 per share on revenue of $80.31 billion for the October-December quarter, according to analysts surveyed by FactSet Research.
Microsoft’s profit was higher, at $38.5 billion, or $5.16 per share, when not incorporating its OpenAI investments, reflecting a new accounting practice the company says it will be using going forward.
Those investments reflect OpenAI’s restructuring last year. Microsoft had a roughly 27% percent, or $135 billion stake, in OpenAI as the startup, originally a nonprofit, has converted itself into a new for-profit public benefit corporation.
While no longer OpenAI’s exclusive cloud provider, a relationship that helped bankroll the AI company’s early growth, Microsoft also will retain commercial rights to OpenAI products through 2032.
Sales from Microsoft’s AI-focused cloud computing business segment was $32.9 billion for the last three months of the year, up 29% from the same time last year and above the $32.4 billion expected by analysts polled by FactSet.
Despite beating expectations, Microsoft stock dropped nearly 5% in after-hours trading after it released its earnings report.
Zacks Investment Research analyst Bryan Hayes said the dip likely reflected “investor scrutiny” over Microsoft’s large amounts of spending on the infrastructure of computer chips and data centers needed to power AI.
Microsoft CEO Satya Nadella said on an earnings call with investors that the company is still in the “beginning stages” of AI diffusion, a term for spreading the usage of AI to a variety of sectors.
