Like many big tech companies, Microsoft is bracing for the worst after announcing plans to cut 10,000 jobs in the upcoming third quarter. It turns out that the company’s second quarter was a mixed bag: It earned $52.7 billion in revenue, up 2 percent from last year, but slightly less than the $52.9 billion analysts expected. Profits also fell 12 percent to $16.4 billion, a trend that could continue throughout the year.
Although fluctuating computer market, Microsoft has been earning high cloud revenue for years, and that looks set to continue. its smart cloud business grew 18 percent over last year, reaching $21.5 billion. Microsoft’s belt-tightening hasn’t stopped the company from investing another $10 billion in ChatGPT creator OpenAI, another sign that AI will play an important role in its future projects. The company plans to soon add ChatGPT to its Azure OpenAI service and reportedly plans to integrate this technology into Bing.
Microsoft’s More Personal Computing division, which includes Windows, Xbox and PC hardware, fell 19 percent year over year to $14.2 billion. This is a direct result of the decline in the PC market. The company says Windows revenue for manufacturers fell 39%, while Xbox content and services also fell 12%. Device revenue also fell 39 percent — apparently Surface devices weren’t in high demand over the holidays.
“A surprisingly strong performance in Microsoft’s key cloud business Azure was enough to ease concerns about a steeper slowdown path for cloud optimizations, sending the stock higher,” said Jesse Cohen, senior analyst at Investing.com. “Tech investors are relieved to see that the slowdown in Microsoft’s key cloud business is not as bad as feared.”
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