Microsoft, the world's largest public company with a market value of nearly $3tn, reported strong earnings for its third quarter of 2024. The technology giant's profits beat Wall Street expectations as its heavy investment in artificial intelligence continued to pay off.
Satya Nadella, Microsoft's CEO, stated that AI tools are orchestrating a new era of transformation across every role and industry. Microsoft started selling its Copilot AI software add-on to small businesses, and Azure reported that AI contributed 6% of the revenue growth within its division in Q4 of 2023.
LinkedIn's AI tools for writing posts and articles increased engagement on the professional social network by 11%. Microsoft is now trying to monetize its dominance in this space, signing a series of high-profile AI deals. Two days before its earnings report, Microsoft announced that Coca-Cola had signed a five-year, $1.1bn contract with Azure for AI and cloud computing services.
Microsoft Cloud Revenue in Q3 2024 was $35.1 billion and grew 23%. Operating income increased by 23%, operating margins expanded to approximately 45%. Commercial bookings increased by 29% year-over-year, driven by Azure commitments.
Despite the strong earnings report, some investors are concerned about inflation, economic growth downturn, and rising two-year Treasury yields. Bill Gross suggested investing in value stocks and avoiding tech for now.
Microsoft is considered the 'highest quality company one can own' due to its diversified AI strategy and subscription models that lower earnings volatility. The company's highly anticipated Copilot AI software add-on has been gaining traction among businesses, contributing to Microsoft's growth in the tech sector.
Microsoft Corp (MSFT) Q3 2024 Earnings Call Transcript Highlights: Strong Growth and AI Innovation
