(CTN News) – Microsoft’s shares fell on Tuesday as the company reported a slowdown in the growth of its business, despite numerous investments in artificial intelligence, including its partnership with OpenAI and Meta.
According to the company’s latest earnings report, the tech giant beat Wall Street revenue expectations with $56.2 billion in revenue, but its cloud service Azure’s revenue growth slowed down as a result of sluggish revenue growth. There was only a 26% increase in revenue from Azure in the fourth quarter of the year compared to the 27% increase in revenue from the third quarter.
As the AI arms race gains momentum, Microsoft’s earnings report comes at an important moment in the race to develop AI systems.
In recent years, tech firms have seen their valuations soar as their investments into AI-enabled technology – such as Microsoft’s revamped Bing search engine chatbot – have come to fruition.
It is widely believed that the tech companies will have to prove their ability to deliver on these promises if they are to succeed in this quarter.
There has been a number of announcements by the company in the past few weeks that has bolstered the firm’s position in the closely watched market as a result of these announcements.
During a release announcing the earnings, Satya Nadella, the Chairman and Chief Executive Officer of Microsoft, said that organizations are seeking ways to use this next generation of artificial intelligence to address the biggest opportunities and challenges they face safely and responsibly, not just how quickly but also how soon they can.
“We remain committed to leading the new AI platform shift, enabling our customers to get the most value out of their digital spend by using the Microsoft Cloud to achieve operating leverage, and advancing their digital transformation.”
In the past few years, Microsoft has been spreading its AI bets across a number of industries. Last week, the company announced that it would partner with Meta to release Llama 2 the social network’s open source large language model, which would be free for anyone to use or use for commercial purposes.
Additionally, earlier this year, the company extended its partnerships with OpenAI, with the ChatGPT creator supplying AI capabilities for Microsoft Azure as well as other AI tools.
These partnerships are being praised by some experts as a way for the company to keep up with its main competitor, Google, which also reported quarterly earnings on Tuesday.
Jeremy Goldman, principal analyst at Insider Intelligence, said in a statement that “Microsoft is improving its search advertising business and commercializing generative AI in ways that Google has yet to achieve,”
As a result, Google’s shares have risen since it released its earnings report on Monday. As AI tools are implemented and adopted, the company is expected to grow in revenue because the demand for its cloud services has increased, which is attributed in part to the increased demand for the company’s cloud services.