The two tech giants saw revenue grow across the board, though Microsoft stock dipped due to the company’s future expectations.
Microsoft and Google’s parent company Alphabet have managed to beat revenue estimates, showing steady growth across the board.
Microsoft’s revenue for its fiscal quarter ending 30 June 2023 was $56.2bn, an increase of 8pc and beating analyst estimates. Net income for the quarter was $20.1bn and grew by 20pc.
The tech giant’s revenue for the full fiscal year was $211.9bn, a yearly increase of 7pc, while diluted earnings per share grew by 7pc to $9.68 under generally accepted accounting principles.
Microsoft has been one of the main companies pushing the AI focus we’ve seen in the global tech sector this year, with its investments in OpenAI. The tech giant has incorporated AI into various products and services, which saw it get a revenue boost earlier this year.
Microsoft chair and CEO Satya Nadella’s response to the results suggests the company will continue its focus on AI for the foreseeable future.
“Organisations are asking not only how – but how fast – they can apply this next generation of AI to address the biggest opportunities and challenges they face – safely and responsibly,” Nadella said. “We remain focused on leading the new AI platform shift, helping customers use the Microsoft cloud to get the most value out of their digital spend, and driving operating leverage.”
Despite the results, Microsoft’s shares have taken a hit in after hours trading, which has been attributed by The Guardian to slower growth in the Azure division. Microsoft Azure and related cloud services saw revenue grow by 26pc, a decline of 1pc compared to the previous quarter.
Microsoft’s forward-looking statements paint a bleaker picture for the coming fiscal year, which may have impacted its shares. The tech giant warned that increased competition in “all of our markets” could lead to lower revenues.
In an earnings call, Microsoft finance chief Amy Hood shared the company’s expected revenue for the upcoming quarter. This was lower than analyst expectations, CNBC reports.
The company also warned of cyberattacks and security vulnerabilities that could lead to “reduced revenue, increased costs, liability claims or harm to our reputation or competitive position”.
Meanwhile, Alphabet reported steady revenue and profit in its latest quarter, with growth in most divisions.
The Google parent company saw revenue grow by 7pc in its second fiscal quarter, rising to $74.6bn. This beat Refinitiv expectations of $72.82bn, CNBC reports. Alphabet’s net income reached $18.36bn for the quarter.
In terms of divisions, Alphabet saw revenue increases across most divisions, though Google Network saw revenue drop by roughly $400m. Google Search revenue rose to $42.62bn, an increase of roughly $2bn compared to the same period last year.
YouTube advertising revenue increased by more than $300m. This marks a change in fortune for YouTube, which was dealing with a drop in advertising revenue for the three previous quarters.
Google Cloud rose from $6.27bn last year to $8.03bn in the latest quarter, continuing the rise to profitability this division saw in April.
Alphabet and Google CEO Sundar Pichai said the results were driven by “exciting momentum across our products and the company”.
“Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search, and improving all our services,” Pichai said. “With fifteen products that each serve half a billion people, and six that serve over two billion each, we have so many opportunities to deliver on our mission.”
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