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Bulletin
Investors are concerned about how much corporations spend on synthetic intelligence, but the tech giant is confident that its efforts will pay off.
By Andrew Ross SorkinRavi MattuBernhard WarnerSarah KesslerMichael J. de Los Angeles MercedLauren Hirsch and Ephrat Livni
The tech sector is facing a difficult period, after Microsoft reported combined quarterly effects and its shares fell. The company’s effects are fueling growing considerations among investors about whether and how long the mammoth spending on synthetic intelligence will pay off.
But analysts say Microsoft is in a better position than its competition and that investor enthusiasm for all things AI is growing. This will continue in the long term.
Microsoft missed earnings expectations for its cloud business by a hair. The company announced Tuesday that its Azure business grew 30% last quarter, just below the company’s 31% forecast.
Shares of the tech giant fell 3% in premarket trading following the results, echoing a market reaction to Alphabet last week when Google’s parent company revealed the scale of its ever-growing AI business.
Other AI-related stocks also fell. Shares of Nvidia, a leader in AI. The chipmaker closed down 7% on Tuesday, wiping about $250 billion off its market value, while those of Arm, the chip design company controlled through SoftBank, fell 6%.
A. I. pricesThe boom weighs on the big tech companies. Microsoft has invested $13 billion in OpenAI, corporate ChatGPT, and several other partnerships with A. I. startups. to meet the growing demand. On Tuesday, the company revealed even more staggering figures about its efforts to win the AI race:
The company spent about $19 billion on capital expenditures last quarter, up about 80% year over year and more than double what it spent two years ago.
Spending on improvements to new buildings and knowledge centers reached $35. 4 billion in the fiscal year just ended, up from $13. 5 billion last year.
Microsoft is going to back down. Satya Nadella, the company’s chief executive, told analysts that investments were key to “seizing the AI opportunity. ” Amy Hood, its chief monetary officer, said spending would increase this year and added that investments in knowledge centers would be monetized “over 15 years and beyond. “
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