Microsoft Says It’s Seeing Extra Demand for AI Than It Can Maintain Up With

After Microsoft (MSFT) reported fiscal first-quarter earnings that topped analysts’ estimates, CFO Amy Hood instructed buyers on the corporate’s earnings name that demand for synthetic intelligence (AI) “continues to be greater than our accessible capability.”

Microsoft’s Clever Cloud phase, which incorporates the Azure cloud computing platform, led progress within the quarter. Income from the phase jumped 20% year-over-year to $24.09 billion as demand for AI surged, although analysts had anticipated extra.

The Quickest-Rising Enterprise in Microsoft’s Historical past

CEO Satya Nadella stated utilization of Azure’s Open AI service greater than doubled over the previous six months, with Microsoft’s AI enterprise on observe to achieve an annual income run price of $10 billion within the second quarter, which might make it “the quickest enterprise in our historical past to achieve this milestone.”

“We’re seeing AI drive a basic change within the enterprise functions market as prospects shift from legacy apps to AI first enterprise processes,” Nadella stated. 

Cloud Progress Might Gradual Earlier than Choosing Up within the Second Half of 2025

Hood stated Microsoft expects Clever Cloud progress may sluggish to between 18% and 20% within the second quarter, with Azure’s progress anticipated to decelerate to between 31% and 32%, earlier than rushing up once more within the again half of the fiscal yr. 

Shares of Microsoft slid about 3% in prolonged buying and selling following the earnings name. They had been up 15% for 2024 via Wednesday’s shut.