Microsoft Search, News Advertising Revenue Up 8% In Q4

Microsoft reported strong fourth-quarter results Tuesday, boosted by strength in artificial intelligence (AI).

Advertising revenue from search and news rose 8% compared with the year-ago quarter -- excluding the traffic acquisition costs paid by Microsoft to publishers.

"We’ve moved from talking about AI to applying AI at scale," Microsoft CEO Satya Nadella said in a statement. "By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”

Revenue overall rose about 17% YoY to $62.1 billion -- a sign that efforts to integrate AI into nearly every product including Azure, Office and Windows are paying off.

“Management believes Bing is gaining some share in search due to Edge browser share gains (Bing is default search), although this does not appear to be at the expense of Google,” wrote Baird Capital Senior Research Analyst Colin Sebastian in a research note published late Tuesday.



He wrote that generative AI in products like Azure AI has enabled more cloud customers to take advantage of the relationship between Microsoft and OpenAI, with more than 53,000 organizations -- up from 18,000 last quarter -- already using the service.

Other initiatives in AI include Azure AI Studio, VS Code and GitHub Copilot. Search continues to be integrated within AI products and Bing Chat is the default search experience for ChatGPT.

In November, Microsoft released to larger companies the corporate version of its Microsoft 365 Copilot, an AI assistant for Office programs like Outlook, Word, PowerPoint and Teams. And it expanded access to smaller firms and released a $20 consumer version.

Microsoft’s Office cloud service for business users also topped 400 million paid customers in the quarter.

Sales in the More Personal Computing unit rose to $16.9 billion. Global personal computer sales rose 0.3% in the quarter, according to market research firm Gartner Inc., the first increase in two years and a sign that demand is stabilizing.

LinkedIn revenue remained steady, with revenue rising 9%. Revenue in Productivity and Business Processes ticked up 13% to $19.2 billion. And revenue from Xbox games and services rose 61% compared with last year, mainly because Xbox acquired Activision Blizzard, increasing the total revenue from gaming by 49%.

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