Microsoft Corp beat Wall Street estimates for fiscal second-quarter revenue on Tuesday, as new artificial intelligence (AI) features helped attract customers to its cloud and Windows services.

(Jan 31): Microsoft Corp beat Wall Street estimates for fiscal second-quarter revenue on Tuesday, as new artificial intelligence (AI) features helped attract customers to its cloud and Windows services.

Microsoft shares fell 1% in volatile after-hours trading, and then rose slightly. They climbed 57% last year. Along with a rally in other tech stocks, including Alphabet and Nvidia, Microsoft helped fuel a 24% surge in the S&P 500 in 2023.

"We've moved from talking about AI to applying AI at scale," chief executive officer Satya 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."

Revenue grew 18% to US$62 billion (RM293.17 billion) in the quarter ended Dec 31, compared with the average analyst estimate of US$61.12 billion, according to LSEG data.

Revenue at Microsoft's Intelligent Cloud unit, which houses the Azure cloud computing platform, grew 20% to US$25.9 billion. Sales of Azure, for which Microsoft does not disclose a dollar figure, grew 30%, compared with a 27.7% consensus estimate from Visible Alpha.

Investors are watching Microsoft's Azure and Office revenues closely to see what kind of sales flow come from the tens of billions of dollars the company plans to pour into data centers this year to deliver generative AI.

Microsoft's stock surge has helped it topple Apple as the world's most valuable listed company in the past few trading sessions. Investors have rewarded the company's push into AI and strategic partnership with Silicon Valley startup and ChatGPT creator OpenAI.

Microsoft's share surge was not dented by a power struggle within OpenAI that highlighted the software giant's lack of direct control over its important partner. Microsoft also faces some legal and regulatory challenges.

In November, Microsoft started selling Copilot, an AI assistant that can summarise an email inbox or craft a slide show, for US$30 per month, which analysts say is a premium price.

Early sales of the product showed up in the firm's commercial sales of Office software, where revenue grew 17%, compared with analyst expectations of commercial Office sales growth of 14.2%, according to data from Visible Alpha. Microsoft does not provide an absolute dollar figure for the sales.

For its fiscal second quarter, Microsoft reported an adjusted profit of US$2.93 per share, compared with analyst estimates of US$2.78 per share.