AI is an expensive business, costing upwards of $100 million to train a new model.
At Microsoft, however, the multibillion-dollar investment in AI appears to be paying off: CEO Satya Nadella said on a quarterly earnings call Wednesday that Microsoft’s AI business “is on track to surpass $10 billion in annual revenue next quarter.” the fastest in our history to reach this milestone.”
Average annual income projects income over time based on past income.
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Microsoft has invested approximately $14 billion in OpenAI, the company behind ChatGPT. It has also made several multibillion-dollar AI commitments, including a deal to reopen Three Mile Island, a nuclear power plant near Harrisburg, Pennsylvania.
Microsoft CEO Satya Nadella. Photo by Ethan Miller/Getty Images
Nadella also revealed on the call, which previewed earnings for the first quarter of fiscal 2025, that Microsoft Cloud revenue increased 22% year-over-year, growing to $38.9 billion in the quarter ended Sept. 30. Total revenue increased by 16% $65.6 billion.
At Microsoft, “AI-driven transformation is transforming work, artifacts, and workflows across every role, function, and business process,” Nadella said.
Despite Microsoft’s better-than-expected earnings, the company’s shares fell more than 5 percent on Thursday because forecasted cloud profit growth was lower than expected.
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Nadella was well compensated for leading Microsoft: He received a raise of more than $30 million in the fiscal year ending June 30, resulting in a total payout of $79.1 million compared to $48.5 million a year earlier.
Nadella’s compensation would have been more than $5.5 million, but he asked for it to be reduced following a series of cybersecurity breaches.
Meanwhile, Microsoft went through layoffs affecting about 1,900 people in its gaming division in January.
Microsoft now has approximately 228,000 employees worldwide.
Related: Microsoft Strikes Back at Salesforce, Announces New AI Agents That Can Take Over Finance, Sales, and Service Jobs
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