Microsoft Dishes on AI Revenue; Google CEO Says ‘Agents’ Are Coming

Microsoft investors tuned into the company’s earnings call with bated breath Tuesday night, looking to see how much its new AI products were boosting sales. Microsoft didn’t deliver an unequivocal blowout—revenue in the December quarter grew moderately faster, year over year, compared to the prior quarter’s growth—but positive signs abounded when it came to generative AI. 

Microsoft doesn’t break out specific figures for its Azure cloud server rentals and other services that are comparable to Amazon Web Services. But on a percentage basis, those types of sales grew 30% year over year, and 6 percentage points of that growth came from demand for “AI services,” including technology from OpenAI, CFO Amy Hood said. As some of you may recall from our reporting, Microsoft resells OpenAI’s large language models and keeps much of the revenue for itself.

It’s safe to assume, then, that application developers spent hundreds of millions of dollars on AI from Azure in the quarter. That could help explain why Azure sales appear to have grown faster than sales at Google Cloud, which on Tuesday reported fourth-quarter revenue growth of 25.6%. Azure is significantly bigger than Google Cloud, meaning its apparently comparable growth rate should be viewed as a great sign.