AI and Cloud drive Microsoft's big revenue numbers, but the Chinese might change that

The next Microsoft financial results might not be as high

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Cloud and AI drove up the Microsoft revenue

Microsoft published the FY25 Q2 financial results that ended on December 31, 2024, and the numbers are great. The software giant announced a revenue of $69.6 billion, a 12% increase over the same quarter from the previous fiscal year.

Microsoft attributes this success to the constant developments of their AI and Cloud products and services:

We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead. Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year, said Satya Nadella, chairman and chief executive officer of Microsoft.

This quarter Microsoft Cloud revenue was $40.9 billion, up 21% year-over-year. We remain committed to balancing operational discipline with continued investments in our cloud and AI infrastructure, added Amy Hood, executive vice president and chief financial officer of Microsoft.

According to the financial report, the most important boost was in Azure and other cloud services which had a cumulative revenue growth of 31%. It was followed by a 19% revenue increase for Intelligent Cloud to $25.5 billion.

These are great numbers, but it will be interesting to see the next financial results because the Chinese recently hit hard in the AI development field. We reported about the newest Chinese DeepSeek AI which already caused a big dent in Nvidia’s stock market value.

In the meantime, Microsoft, together with OpenAI are investing in Project Stargate, to counter the Chinese offensive and establish an AI stronghold in the U.S. The project has a 500 billion planned investment in AI infrastructure that will certainly move things forward in this domain.

We don’t expect any major changes, because Microsoft’s services are business oriented and they cover a wide array. Although the Redmond giant has invested billions into AI development, they are still on the right track and could learn a lot from the Chinese training models which are open-source.

The battle for AI has only started and if Microsoft’s 6 AI trends come to fruition, we have much to look forward to.

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