Microsoft Q4: Search and news ad revenue up by 8%

Microsoft has reported its strongest financial quarter to date after becoming a $3 trillion company. Its profit for the October-December quarter soared to 33%, powered by its significant investments in artificial intelligence technology. 

Satya Nadella-led firm’s Search and News Advertising revenue increased 8% year on year, excluding traffic acquisition costs that Microsoft pays to publishers. However, it marks a slowdown in growth in comparison to the previous quarter’s 10% increase.

Meanwhile, total sales during the three months ending December 31, 2023, generated $62 billion for Microsoft, a year-on-year increase of 18%. 

Nadella, chairman and chief executive officer of Microsoft, said in a statement, “We’ve moved from talking about AI to applying AI at scale. 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.”

The company reported net income for the quarter of $21.87 billion, or $2.93 per diluted share, beating Wall Street expectations of $2.79 per share. The Redmond, Washington-based software maker posted revenue of $62.02 billion in the quarter, up 18% from $52.75 billion the previous year, also beating expectations.

“Microsoft is firmly establishing itself as a frontrunner in the AI race,” said Jeremy Goldman, director of briefings at Insider Intelligence. In addition to other benefits, Goldman suggested that AI technology could help expand Microsoft’s share of digital advertising. His firm anticipates that Microsoft’s worldwide ad revenues will grow 12% this year to $14.93 billion, but also notes that Google is expected to expand its much larger ad business by 10% in the same period.