<p>Microsoft on Tuesday surpassed Wall Street estimates for fourth-quarter revenue and profit as its cloud business benefited from product upgrades featuring new artificial intelligence (AI) technology.</p>.<p>But costs rose sharply from the previous quarter as it built new data centers to support AI, and Microsoft Chief Financial Officer Amy Hood said on a conference call with analysts that the company's capital expenditures will continue to increase each quarter throughout the company's fiscal 2024.</p>.<p>Shares fell about 3 per cent in after-hours trade.</p>.<p>Wall Street is looking at how generative AI services may benefit Microsoft, which secured an early lead with investments in OpenAI, owner of the popular ChatGPT service.</p>.<p>Microsoft is weaving AI into its own products, such as the $30-a-month "Copilot" for its Microsoft 365 service that can summarize a day's worth of emails into a quick update. It is also aiming to sell cloud computing services that other firms will use to build AI services.</p>.<p>Microsoft's results show heavy spending on AI services ahead of commensurate revenue growth.</p>.<p>While its Azure sales growth rate was slightly higher than market expectations, Microsoft's quarterly capital expenditures hit the highest single-quarter total since at least its fiscal 2016. The company is battling other cloud providers for a limited supply of chips from Nvidia Corp, whose graphics processing units are essential for creating AI products and services.</p>.<p>Microsoft forecast Azure revenue growth of 25 per cent-26 per cent in constant currency for the fiscal first quarter, compared with an estimate of 25.6 per cent from Visible Alpha that does not adjust for foreign exchange rates.</p>.<p>Microsoft forecast first-quarter revenue for the segment that includes Azure with a midpoint of $23.45 billion, compared with analyst estimates of $23.55 billion, according to Refinitiv data.</p>.<p>Its first-quarter forecast for the segment that includes Office was $18.15 billion, compared with Refinitiv analyst estimates of $18.08 billion.</p>.<p>Microsoft's forecast for its Windows segment was $12.7 billion, compared with analyst estimates of $13.14 billion.</p>.<p>Revenue in the fiscal fourth quarter ended June 30 rose to $56.2 billion, compared with analysts' consensus estimate of $55.5 billion according to Refinitiv. Net income was $2.69 per share, above estimates of $2.55 per share.</p>.<p>Microsoft's Intelligent Cloud unit, which houses the Azure cloud computing platform, increased its revenue to $24 billion, compared with expectations of $23.8 billion.</p>.<p>Azure revenue rose 26 per cent, beating a 25.2 per cent growth estimate from Visible Alpha.</p>.<p>The company does not break out the absolute revenue figure for Azure, the part of Microsoft's business best situated to capitalize on booming interest in AI.</p>.<p>The company is still navigating a PC business slump, with sales including of its Windows operating system falling to $13.9 billion. This compares with analysts' consensus estimate of $13.6 billion according to Refinitiv.</p>.<p>The Microsoft segment containing the LinkedIn social network and its Office productivity software grew to $18.3 billion, compared with analysts' consensus estimate of $18.1 billion according to Refinitiv data.</p>.<p>Capital expenditures jumped to $10.7 billion from $7.8 billion in the fiscal third quarter, after the company told investors that spending would rise as it builds out data centers for AI work.</p>.<p>"We remain focused on leading the new AI platform shift," Chief Executive Satya Nadella said in a statement announcing the results.</p>.<p>Microsoft has started integrating AI functionality across its products such as Azure, Microsoft 365, GitHub and several developer tools.</p>
<p>Microsoft on Tuesday surpassed Wall Street estimates for fourth-quarter revenue and profit as its cloud business benefited from product upgrades featuring new artificial intelligence (AI) technology.</p>.<p>But costs rose sharply from the previous quarter as it built new data centers to support AI, and Microsoft Chief Financial Officer Amy Hood said on a conference call with analysts that the company's capital expenditures will continue to increase each quarter throughout the company's fiscal 2024.</p>.<p>Shares fell about 3 per cent in after-hours trade.</p>.<p>Wall Street is looking at how generative AI services may benefit Microsoft, which secured an early lead with investments in OpenAI, owner of the popular ChatGPT service.</p>.<p>Microsoft is weaving AI into its own products, such as the $30-a-month "Copilot" for its Microsoft 365 service that can summarize a day's worth of emails into a quick update. It is also aiming to sell cloud computing services that other firms will use to build AI services.</p>.<p>Microsoft's results show heavy spending on AI services ahead of commensurate revenue growth.</p>.<p>While its Azure sales growth rate was slightly higher than market expectations, Microsoft's quarterly capital expenditures hit the highest single-quarter total since at least its fiscal 2016. The company is battling other cloud providers for a limited supply of chips from Nvidia Corp, whose graphics processing units are essential for creating AI products and services.</p>.<p>Microsoft forecast Azure revenue growth of 25 per cent-26 per cent in constant currency for the fiscal first quarter, compared with an estimate of 25.6 per cent from Visible Alpha that does not adjust for foreign exchange rates.</p>.<p>Microsoft forecast first-quarter revenue for the segment that includes Azure with a midpoint of $23.45 billion, compared with analyst estimates of $23.55 billion, according to Refinitiv data.</p>.<p>Its first-quarter forecast for the segment that includes Office was $18.15 billion, compared with Refinitiv analyst estimates of $18.08 billion.</p>.<p>Microsoft's forecast for its Windows segment was $12.7 billion, compared with analyst estimates of $13.14 billion.</p>.<p>Revenue in the fiscal fourth quarter ended June 30 rose to $56.2 billion, compared with analysts' consensus estimate of $55.5 billion according to Refinitiv. Net income was $2.69 per share, above estimates of $2.55 per share.</p>.<p>Microsoft's Intelligent Cloud unit, which houses the Azure cloud computing platform, increased its revenue to $24 billion, compared with expectations of $23.8 billion.</p>.<p>Azure revenue rose 26 per cent, beating a 25.2 per cent growth estimate from Visible Alpha.</p>.<p>The company does not break out the absolute revenue figure for Azure, the part of Microsoft's business best situated to capitalize on booming interest in AI.</p>.<p>The company is still navigating a PC business slump, with sales including of its Windows operating system falling to $13.9 billion. This compares with analysts' consensus estimate of $13.6 billion according to Refinitiv.</p>.<p>The Microsoft segment containing the LinkedIn social network and its Office productivity software grew to $18.3 billion, compared with analysts' consensus estimate of $18.1 billion according to Refinitiv data.</p>.<p>Capital expenditures jumped to $10.7 billion from $7.8 billion in the fiscal third quarter, after the company told investors that spending would rise as it builds out data centers for AI work.</p>.<p>"We remain focused on leading the new AI platform shift," Chief Executive Satya Nadella said in a statement announcing the results.</p>.<p>Microsoft has started integrating AI functionality across its products such as Azure, Microsoft 365, GitHub and several developer tools.</p>