Artificial intelligence: AI software to boost cloud growth at Microsoft

2023-07-26 04:19:08

Artificial intelligence AI software to boost cloud growth at Microsoft

The Microsoft logo can be seen on a company building. photo

© Toby Scott/SOPA Images via ZUMA Wire/dpa

The cloud business has long been a growth driver at Microsoft. But the growth rates are weakening. New applications with artificial intelligence should get them going again.

Microsoft is banking on AI software like ChatGPT to give its business a long-term boost. The use of programs with artificial intelligence increases the need for cloud infrastructure by about Microsoft’s Azure platform, said company boss Satya Nadella. It would be a welcome tailwind for Azure, since Microsoft’s long-standing growth driver is delivering smaller growth rates.

In the past quarter, Azure growth, adjusted for exchange rate fluctuations, slowed to 27 percent. The forecast of 25 to 26 percent growth in the current quarter disappointed investors. Because not so long ago there had been growth rates of more than 40 percent. The stock fell 3.7 percent in after-hours trading on Tuesday.

AI “Copilot” for Microsoft’s Office programs

Of the forecast growth in Azure, around two percentage points are expected to come from the cloud business with AI services. Microsoft entered into a multi-billion dollar pact with the ChatGPT developer company OpenAI and is gradually incorporating the start-up’s technology into many of its products.

An AI “copilot” for Microsoft’s Office programs was recently presented. It is integrated into the office applications and can analyze content from e-mails, calendars, chats and documents, among other things. Microsoft plans to charge commercial customers of its Microsoft 365 package in the US $30 per month per user. Copilot is an important pillar for Microsoft 365, Nadella pointed out.

In the past quarter, Microsoft increased sales by eight percent to around 56.2 billion dollars (almost 51 billion euros) thanks to the demand for cloud services. The bottom line was that profits in the fourth business quarter, which ended at the end of June, reached a good 20 billion dollars after 16.7 billion dollars a year earlier.

dpa