Like many big tech companies, Microsoft is bracing for the worst after announcing it will lay off 10,000 employees in the upcoming third quarter. It turns out the company’s second quarter was a mixed bag: It generated $52.7 billion in revenue, up 2 percent year-on-year, but just slightly below the $52.9 billion expected by analysts US dollars left. Earnings also fell 12 percent to $16.4 billion, a trend that could continue throughout the year.
Despite the flagging PC market, Microsoft has relied heavily on cloud revenue for years, and that looks set to continue. The intelligent cloud business grew 18 percent year over year to $21.5 billion. Microsoft’s belt-tightening didn’t stop the company from potentially investing another $10 billion in ChatGPT developer OpenAI, another sign that AI will play a major role in its future projects. The company plans to add ChatGPT to its Azure OpenAI service soon, and reportedly plans to integrate this technology with Bing.
Microsoft’s More Personal Computing division, which includes Windows, Xbox and PC hardware, fell 19 percent year over year to reach $14.2 billion. This is the direct result of the downturn in the PC market. The company says Windows revenue for manufacturers is down 39 percent, while Xbox content and services are also down 12 percent. Device sales also fell 39 percent – it turns out that Surface devices weren’t in high demand over the holiday season.
“The surprisingly strong performance in Microsoft’s key business, Azure Cloud, was enough to allay worries of a steeper braking path in cloud optimization and propel the stock higher,” said Jesse Cohen, senior analyst at Investing.com. “Tech investors are relieved to see that the slowdown in Microsoft’s core cloud business wasn’t as bad as feared.”
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