Microsoft has reported a better-than-expected quarterly profit on Tuesday as strong performance at its cloud services business helped offset a slump in the personal computer market.
The upbeat results from Microsoft, whose business spans cloud services, software, gaming and computer hardware, will likely allay fears of a meltdown in the tech industry which has laid off tens of thousands of employees this year in anticipation of an economic downturn.
Microsoft said Azure cloud product revenue rose 31 per cent in the second quarter, in line with estimates compiled by Visible Alpha, while its broader Intelligent Cloud division posted revenue of US$21.5 billion, versus a Wall Street consensus of US$21.4 billion compiled by Refinitiv.
Azure could get a boost from cloud spending from the growth of artificial intelligence.
"There's a variety of ways that we can bring that technology either in specific offerings or to improve existing offerings to customers across a variety of our businesses," said Brett Iversen, Microsoft's head of investor relations, referring to OpenAI, in which the company is investing heavily.
OpenAI is behind the chatbot sensation ChatGPT which can generate out a love story in the style of Shakespeare or other prose with a text command.
That model has been built with computing time on Azure as well.
Microsoft has also seen Azure steadily grabbing market share from leader Amazon Web Services (AWS).
Azure ended 2022 with 30 per cent share in the cloud computing market, up from 20 per cent in 2018, according to estimates from BofA Global Research.
Meanwhile, AWS dropped to 55 per cent from
Growth for Azure has slowed steadily from around 50 per cent a little over a year ago, but investors had feared worse.
On an adjusted basis, Microsoft earned US$2.32 per share for the fiscal second quarter, topping expectations of US$2.29.
Microsoft's revenue rose 2 per cent to US$52.7 billion in the three months ended December 31, compared with the average analyst estimate of US$52.94 billion, according to Refinitiv IBES.
Sales at Microsoft's More Personal Computing segment, which includes Windows, devices and search revenue, declined 19 per cent to US$14.2 billion as the PC market continued to shrink.
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