Success of AI products such as ChatGPT boosts Microsoft revenue

Revenue in the fiscal first quarter, which ended on September 30, rose 13pc to $56.5bn (€53.4bn), the most in six quarters and topping analysts’ average projections. Profit was $2.99 a share, the software maker said in a statement. Azure cloud-services sales gained 29pc, compared with 26pc growth in the previous quarter.

Chief executive officer Satya Nadella is revamping the company’s entire product suite, including Office, Windows, search and security software, to add features based on OpenAI technology. The partnership has helped Microsoft lure corporate customers keen to use ChatGPT and other new technologies – which answer questions and generate content – in their own applications. The company, which already counts most businesses as clients of its productivity tools and operating systems, has also been testing a pricier, AI-enhanced version of its Office software.

“If we see stabilisation in Azure then the euphoria returns,” said Dan Morgan, senior portfolio manager at Synovus Trust. “Enterprise software within tech is probably one of the best spaces now and Microsoft looks pretty strong.”

Shares rose 3.6pc in premarket trading on Wednesday, after closing at $330.53 in New York.

If the gains hold, it would be the biggest increase since July 18. The stock fell 7.3pc in the three months ending in September, a steeper drop than the 3.6pc decline posted by the S&P 500 Index during that period.

Microsoft’s results, and the investor enthusiasm that followed, contrasted with a third-quarter earnings report from rival Alphabet, parent of Google, which has been trying to catch Azure in cloud-computing market share.

Alphabet’s revenue and profit from its cloud business missed analysts’ estimates, sending shares down 6.5pc in early trading.

The two companies, which both trail Amazon.com in cloud infrastructure, have been racing to build up their AI offerings as a way to make their platforms more enticing to customers. Amazon is set to report its quarterly results on Thursday.

In the recent period, Microsoft reported better-than-projected commercial sales, while a steadier personal-computer market helped shore up revenue. Internet search, a service the software maker has imbued with the same technology as ChatGPT, also generated higher sales than forecast, chief financial officer Amy Hood said in an interview.

She said Microsoft gained share in markets like cloud, security software and business applications in areas such as finance and customer management.

“It was good execution, the PC market a little better and cloud numbers a little better,” said Ms Hood, explaining why overall quarterly revenue far exceeded her July forecast. “I’m pretty pleased.”