Microsoft's revenue surged in the final months of 2023, driven by increased demand for its artificial intelligence (AI) tools, leading the company to surpass Apple as the world's most valuable listed company with a market value exceeding $3 trillion.
The tech giant reported an 18% year-on-year revenue growth from September to December, totaling over $60 billion. Chief Executive Satya Nadella highlighted Microsoft's significant investment in applying AI "at scale," positioning the company at the forefront of the tech industry's race to capitalize on the next wave of growth driven by AI advancements.
Microsoft's strategic focus on AI includes a substantial stake in OpenAI, the creator of the ChatGPT bot, which has generated considerable optimism since its launch in 2022. However, Microsoft and OpenAI face controversy as the New York Times files a lawsuit alleging copyright infringement in training the ChatGPT system, seeking damages amounting to "billions of dollars."
Amidst these developments, Microsoft continues to integrate AI-assisted tools into its offerings, including Copilot, which assists with coding and other tasks, and has seen successful sales since its launch in November. Additionally, Microsoft's Azure cloud computing platform experienced a 30% year-on-year sales increase, surpassing analyst predictions.
The company's overall profits for the quarter rose by 33% year-on-year, reaching $21.9 billion, underscoring the positive impact of its AI-focused strategy.
Meanwhile, Alphabet, Google's parent company, also reported a strong performance, with revenues for the September-December quarter rising by 13% year-on-year and profits nearly doubling from the previous year to nearly $20.7 billion. Alphabet's CEO, Sundar Pichai, highlighted the contributions of AI investments to the success of its search, cloud computing, and YouTube platforms.
Despite the robust financial performance, both Microsoft and Alphabet have implemented workforce reductions. Google's headcount has decreased by approximately 5% since the previous year, with recent announcements of additional job cuts. Similarly, Microsoft announced plans to streamline its gaming unit, resulting in a reduction of 1,900 jobs, or 9% of the division's staff, following its acquisition of Activision Blizzard.
Microsoft's strong financial results underscore the significant role of AI in driving its growth trajectory, positioning the company as a leader in the tech industry's ongoing AI race, despite facing legal challenges and workforce adjustments.
