Microsoft has published its financial results for quarter two of fiscal 2023. The quarter ended December 31, and the company reported a strong performance in the highly competitive cloud service market. Microsoft reported $52.7 billion in revenue last quarter. This was up 2% year over year. Net profit, however, reached $16.4 billion. That’s a 12% decrease.
Investors were relieved by the company’s relatively strong financials, which helped to alleviate their fears of a decline in revenue from customer spending cuts. The decline in PC-related sales has been partially offset by cloud revenues. Experts say that forecasts for further earnings from Microsoft’s Cloud business are not indicative of a decline in the situation but rather reflect a new economic reality.
The company’s revenue from intelligent cloud solutions was $21.5 billion, an 18% increase. This project has been attracting a lot of business attention due to its viral success with ChatGPT, an AI powered chatbot. Microsoft has made significant investments in OpenAI, the developer company, and plans to continue these investments in the future. OpenAI also offers cooperation with Azure cloud services. Microsoft is counting on this segment’s profitability. During the earnings call, Microsoft CEO Satya Nadella said it’s too early to separate earnings reports for the AI segment from statistics for the cloud business as a whole.
The revenue from Azure cloud products grew by 31% during the second quarter. The company has taken significant market share from Amazon Web Services (AWS), its main competitor. BofA Global Research reports that Azure finished 2022 with a 30% market share in cloud computing, up from 20% in 2018. AWS’ share decreased from 71% down to 55% over the same period.
Microsoft’s PC-related sales fell 19% to $14.2 million as the PC market continued its decline. The decline in OEM Windows sales and the decrease in sales of Windows devices was particularly noticeable. Device sales are even more remarkable when you consider that last quarter saw the release of Surface Pro 9, Surface Laptop 5, and Surface Studio 2 Plus. According to the company, revenues will fall to $11.9-12.3 trillion in the current fiscal quarter.
Microsoft shares rose by 4% after publishing the results. However, they fell to $239.58 at the close of trading. The company’s share price has declined by 18% in the last 12 months.