Microsoft’s latest earnings call reveals the company is increasingly relying on its Cloud and AI businesses for future gains.
Cloud revenue grew 22% year-over-year, and “Intelligent Cloud” saw a 20% bump as well. Microsoft’s Cloud services include a range of cloud-hosted software solutions for businesses, including Microsoft Defender, Sentinel, Azure, AI, and other offerings. The Intelligent Cloud consists of server products and cloud services including GitHub cloud services and other cloud computing options.
The company also believes its AI business may rise to $10 billion by mid-2025, according to a post from Microsoft Communications Lead Frank Shaw. Microsoft has been pushing AI across its enterprise products with upcoming launches like autonomous AI agents, and has released a line of Copilot+ PCs and released AI features like Recall this year.
“AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process,” Microsoft Chairman and CEO Satya Nadella said in a statement. “We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage.”
Xbox games and subscriptions also saw a 61% boost, which Microsoft says was partially driven by its Activision Blizzard acquisition. But hardware sales are down 29% this quarter. Xbox has started opening up its games to more platforms, including to PCs, the PS5, and the Nintendo Switch, and Xbox hasn’t released a new console in years. Most recently, Microsoft launched refreshes of the existing Series S and X this month, but the main advantage of the updated consoles is increased storage space.
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Microsoft sees AI as an integral part of its business, but it’s also spending more with the hopes its AI investments will pay off. All that AI computing means it’ll need more data centers and power sources to fuel future growth. The company already has over 300 data centers around the world, and, like Google, plans to open nuclear plants to power its AI plans.
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