• by Laurie Sullivan  @lauriesullivan, January 30, 2025

Microsoft reported its second-quarter 2025 earnings Wednesday, showing its search and advertising revenue rose 21%. For the previous quarter, search and ad revenue was up 18%, then 19%, respectively. and before that it was 12% and 8%.

“We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead," Satya Nadella, chairman and chief executive officer of Microsoft, wrote. “Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year.”

As of January 2025, Bing accounted for 12.23% of the global desktop search market, while Google had a share of around 78.83%.

Yahoo's market share was 3.07%, according to data from Statista. 

Overall, Microsoft revenue rose 12% to $69.6 billion in the quarter. Operating income rose 17% to $31.7 billion, while net income rose 10% to $24.1 billion and diluted earnings per share rose 10% to $3.23.

Cloud revenue continues to build. Microsoft Cloud revenue in the quarter rose 21% to $40.9 billion year-over-year. The company remains committed to balancing operations with continued investments in its cloud and AI infrastructure.

Nadella said in a statement that it has “surpassed an annual revenue run rate of $13 billion, up 175 percent year-over-year.” The company’s Azure and other cloud services business grew 31% year-over-year, slightly down from 33% YoY growth the previous quarter.

Microsoft also did something unexpected on Wednesday. The company separately said it would add China’s DeepSeek RI model to its Azure AI Foundry platform and GitHub. The same R1 model, which can reason, that rocked financial and AI worlds this week for having the ability to train and learn at a fraction of the cost of OpenAI and others.

OpenAI on Wednesday suggested that Chinese AI startup DeepSeek's open-source models may have "inappropriately" based its work on the output of OpenAI's models.

R1 was released as an open-source model earlier this month. While few paid attention to it, Microsoft had picked up the pace to integrate it into Azure AI Foundry. DeepSeek also plans to make a smaller version to run locally on Copilot Plus PCs.