Microsoft announced on Wednesday that it made profits of $24.1 billion in the most recent quarter, but its stock price declined due to concerns about its cloud computing segment.
Microsoft revenue increased to $69.6 billion and the earnings from its "intelligence cloud" unit rose to $25.5 billion, though this was short of marketplace forecasts.
Investor shares slipped marginally during after-hours trading.
Microsoft CEO Satya Nadella highlighted the company's significant investments in artificial intelligence in the earnings announcement, stating that the firm is "innovating across its technological foundation" to enable customers to generate revenue from AI-driven products.
Nadella stated that Microsoft's AI business is on track to earn over $13 billion annually, more than tripling the annual revenue achieved just a year prior.
The company based in Redmond has been at the forefront of the generative AI revolution, primarily due to its collaboration with OpenAI, the developer behind ChatGPT.
The company has expedited the rollout of AI features, primarily under its Copilot brand, fostering optimism among investors regarding a potential return on investment from the high-cost technology.
Microsoft president Brad Smith has stated that the company plans to invest around $80 billion in artificial intelligence (AI) this fiscal year.
Smith argued that AI is on the cusp of revolutionizing all aspects of life, and it is crucial that the United States leading the way globally in the field, he stated in a recent online post.
"Artificial intelligence is the electricity of our age, and the next four years have the potential to lay a strong foundation for America's economic growth over the next quarter century," Smith stated.
China and the United States are engaged in a competitive race to develop and deploy AI systems in various countries with an aim of establishing themselves as the global benchmark for AI technology.
"The Chinese are aware that if a country adopts their AI system as the standard, it is likely to rely on it in the future as well," Smith stated.
The introduction of the DeepSeek chatbot has caused a flurry of excitement in Silicon Valley, with some urging a hastened pace in developing artificial intelligence to stay ahead of China, which is rapidly developing its AI capabilities under a communist government.
Noting the US government's efforts to maintain its leadership in artificial intelligence through export controls on cutting-edge chips, DeepSeek managed to achieve equally impressive results by employing authorized, more modest Nvidia semiconductors.
For its part, Microsoft is on track to allocate approximately $80 billion this year towards the development of AI data centres, training AI models, and deploying cloud-based applications worldwide, as stated by Smith.
Microsoft's 2025 fiscal year concludes on June 30th.
Microsoft rivals, including Amazon, Google, and OpenAI, have also invested heavily in AI research, pouring billions of dollars into it, yet the return on these investments remains unclear, including when they expect to profit.