Proactive Investors - Microsoft Corporation (NASDAQ:MSFT) shares were heading for a slight decline on Wednesday despite a strong performance from its Cloud division helping quarterly revenue and earnings beat Wall Street expectations.
The company's total revenue for its fiscal second quarter rose 18% year-on-year to $62 billion, above estimates of $61 billion, according to results released after Tuesday's closing bell.
Cloud revenue, including from its Azure platform, rose 24% year-over-year to $33.7 billion.
On the earnings call with analysts, CEO Satya Nadella said that the company's investment in and partnership with ChatGPT developer OpenAI was a key boost for the Cloud division, saying "Azure OpenAI and OpenAI's own API on top of Azure" were "major drivers" of performance for the quarter.
Nadella said the first major companies using the company's AI tools included Walmart (NYSE:WMT), Coca-Cola (NYSE:KO) and Ally Financial.
Revenue from its More Personal Computing segment, which contains Windows software and its Activision Blizzard (NASDAQ:ATVI) gaming acquisition completed in October, increased 19% to $16.9 billion. This included a 61% jump in Xbox content and services revenue driven by the Activision takeover.
Group earnings per share were up 33% year-on-year to $2.93, beating expectations of $2.76 per Zacks consensus estimate.
"We’ve moved from talking about AI to applying AI at scale," 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.”
The shares fell after the earnings call from the Redmond, Washington-based company's management, trading over 2% lower, below the $400 level they breached for the first time earlier this month.
Heading towards the opening bell on Wednesday, they were changing hands at $404.43 in pre-market trading, a decline of just over 1%.