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Analyticsindiamag
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Microsoft Expects $1.5 Billion Loss from OpenAI
- Microsoft expects a $1.5 billion loss from its stake in OpenAI.
- The anticipated loss is accounted for under 'other income and expense' in Microsoft's Q1 2025 earnings.
- Microsoft CEO, Satya Nadella, sees the partnership with OpenAI as beneficial and highlights their revenue momentum.
- OpenAI raised $6.6 billion at a valuation of $157 billion, but forecasts indicate it won't achieve profitability until 2029.
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Geek Wire
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Microsoft’s financial disclosures show how OpenAI is fueling growth — and taking a toll on profits
- Microsoft has disclosed its total funding commitments to OpenAI at $13bn, including the addition of $750m invested in October. A filing revealed Microsoft had to record a $683m equity expense for the quarter, citing losses from OpenAI as a reason, adding it expected a similar $1.5bn negative performance in the next quarter. Amy Hood, Microsoft's CFO, noted that the overall AI investment was paying off and AI was on pace to exceed $10bn run rate in the Q2. It is estimated that OpenAI has lost around $5bn this year so far.
- The magnitude of Microsoft's losses reflects the company's partnership with OpenAI. For instance, last month, Microsoft partnered with Anthropic and Google to provide alternatives to ChatGPT for developers using Microsoft’s popular GitHub Copilot coding companion.
- The alliance between Microsoft and OpenAI has yielded positive results, with the use of Microsoft's Azure OpenAI services doubling in the last six months. AI services also contributed 12 percentage points to the 33% increase in Azure cloud revenue in the latest quarter.
- Notably, this is the first time that Microsoft has disclosed its total funding commitments to OpenAI amid reports of a falling out between the tech companies. The partnership has stretched for five years.
- Microsoft CEO Satya Nadella said his company's partnership with OpenAI had been super beneficial, with Microsoft acting as the infrastructure provider while OpenAI provided innovative AI models that they leverage. Nadella added that building on the investment stake in OpenAI would lead to more innovations and greater success.
- Despite OpenAI’s continuing losses, the startup is raising billions of dollars in funding. In October, the organization received an additional $1.5bn in funding through partnerships with Microsoft, PayPal co-founder Peter Thiel, Salesforce CEO Marc Benioff, and others.
- OpenAI was established in 2015 with the mission of securing AI safety while ensuring its benefits can be spread across all humankind. The firm has come under fire from critics who believe OpenAI's actions and innovations could have negative consequences.
- Founded in 1975, Microsoft is an American multinational technology company that has been trusted globally for over four decades. It provides computing solutions for consumers and companies, including operating systems, cross-device productivity software, server applications, and tools, CRM solutions, AI services, and more.
- OpenAI is a San Francisco-based research firm that builds and deploys AI models and systems to solve real-world problems. The firm develops intelligent systems similar to human brains that can leverage skills across a range of applications.
- The AI industry is expected to gulp $118.6 billion by 2025, compared to $2.5 billion in 2017. This growth has been attributed to the surge in data generation and aquifer deep learning algorithms probability. OpenAI is in a strong position to leverage this growth by providing AI solutions to businesses and entrepreneurs.
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Pymnts
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Microsoft’s AI Bet Shows Strong Early Returns as Enterprise Adoption Accelerates
- Microsoft reports growth in AI adoption across its product portfolio, with over 60,000 Azure AI customers and increasing average spend per customer.
- Enterprise adoption of Microsoft's AI tools is strong, with GitHub Copilot being the most widely adopted AI-powered developer tool.
- Large enterprises are making significant commitments to Microsoft's AI technology, with over 10,000 customers and EY deploying Copilot to 150,000 employees.
- Microsoft plans to scale its AI infrastructure to meet growing demand, despite current capacity constraints.
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Siliconangle
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Microsoft’s AI bet pays off as Azure revenue grows, but stock falls on infrastructure supplier delays
- Microsoft reported fiscal first quarter earnings of $3.30 per share, beating Wall Street’s target of $3.10 per share, while revenue jumped 16% from a year earlier, to $65.59 billion, ahead of the $64.51 billion consensus estimate.
- However, the company's forecast for the current quarter's revenue is lower than the Street's forecast for the same period, i.e. $68.1 billion - $69.1 billion vs. $69.83 billion.
- The company attributed the lower guidance to delays in equipment delivery from data center infrastructure suppliers.
- Microsoft's Azure and other cloud services revenue growth metric excluded sales from mobility, security and data analytics tools, providing a clearer picture of Azure consumption, which increased by 33% in real terms and 34% at constant currency.
- Sales from productivity and business processes increased 12% YoY to $28.32 billion, coming just ahead of the $27.9 billion consensus estimate.
- Microsoft's IoT investments have made it tough to gauge how much revenue the company is generating from these endeavors.
- Microsoft's More Personal Computing segment is smaller but still managed to grow 17% YoY in revenue.
- Despite many analysts feeling that "agentic AI" will be the next big AI industry area, Microsoft has yet to reveal its hand in this space.
- Microsoft's stock fell more than 3% in the after-hours trading session.
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VentureBeat
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Call of Duty: Black Ops 6 is biggest release in history
- Call of Duty: Black Ops 6 has the biggest three-day opening sales in franchise history.
- The game set a record for day one players and Game Pass subscriber adds on launch day.
- Unit sales on PlayStation and Steam were up over 60% year-over-year.
- Call of Duty has sold more than 425 million copies and generated $30 billion in revenue by 2022.
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Insider
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Microsoft hints at a big change to its OpenAI investments in a new SEC filing
- Microsoft disclosed an equity investment in OpenAI for the first time, SEC filings show.
- Previously, Microsoft described its relationship with OpenAI as a partnership.
- The latest disclosure suggests that Microsoft purchased stock or share rights in OpenAI.
- Microsoft has been using OpenAI's language models for its AI products.
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Insider
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Microsoft reports stronger-than-expected earnings as it ramps up capital spending
- Microsoft reported stronger-than-expected Q1 earnings as cloud computing grew.
- Q1 capital spending reached $20 billion, focusing on data centers and AI projects.
- Microsoft Cloud revenue rose 22% from a year earlier to $38.9 billion.
- Investors have been tracking Microsoft's spending on AI, while concerns about returns on AI investments persist.
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Guardian
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Microsoft sails as AI boom fuels double-digit growth in cloud business
- Microsoft reported better-than-expected earnings, driven by growth in Azure cloud business.
- Azure revenue increased by 22%.
- Investors are growing wary of big tech's AI bet and seeking clarity on when it will pay off.
- The Wedbush analyst believes Microsoft is in the driver's seat with strong cloud momentum.
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Microsoft
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Microsoft Cloud strength drives first quarter results
- Microsoft Corp reported a revenue of $65.6bn for Q1 2024, an increase of 16% YoY. Operating income and net income rose by 14% and 11% respectively. Microsoft Cloud revenue grew by 22% YoY to $38.9bn, driven principally by Azure and other cloud services revenue growth of 33% YoY. Azure and other cloud services boosted server products and cloud services revenue by23% YoY. Dynamics products and cloud services reached 14%, driven by Dynamics 365 revenue growth of 18% YoY. LinkedIn revenue increased by 10%.
- Revenue in Productivity and Business Processes was $28.3bn and increased 12%, while in Intelligent Cloud was $24.1bn and increased 20%. More Personal Computing revenue increased by 17% to $13.2bn. Microsoft Cloud revenue contributed greatly to the growth year over year. Dynamics 365 revenues grew by 18% on the back of 14% Dynamics product and cloud services revenue growth.
- Microsoft returned $9.0bn to shareholders in the form of dividends and share repurchases in Q1 2024. Products and services, security, privacy and execution risks are some of the cybersecurity and environmental concerns facing the tech giant. An inability to protect and utilize Microsoft's intellectual property poses potential harms to its business and operating results.
- AI-driven transformation is changing work, work artifacts and work flows across every role, function, and business process. Satya Nadella, CEO, said the application of the company's AI platforms helps drive new growth and operating leverage.
- Microsoft shares were up 3.3% to $338.65 each in after-hours trading following the announcement of strong Q1 financial results. This was led by a better-than-expected increase in revenue and operating income, driven largely by growth in cloud computing and gaming.
- Xbox content and services revenue increased by over 60%, mainly due to the 2015 acquisition of Mojang, the Swedish video game developer who created the popular game Minecraft. Windows OEM and devices revenue rose by 2%, while more personal computer revenue surged by 17%.
- Microsoft is committed to making AI available broadly, with a mission to empower every person and every organisation on the planet to achieve more. The company adopts a forward-looking approach to address potential cybersecurity risks and adhere to ESG principles in line with sustainability regulations and expectations.
- The management discussion and analysis of financial condition and results of operations provided information about risks and uncertainties associated with Microsoft's business. The focus on cloud-based and AI services presenting execution and competitive risks. Microsoft Cloud revenue growth was driven by Azure and other cloud services, and impacts of foreign currency rate fluctuations are presented, excluding the effect of currency rate fluctuations.
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Microsoft
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Microsoft earnings press release available on Investor Relations website
- Microsoft Corp. announced that fiscal year 2025 first-quarter financial results are available on its Investor Relations website.
- The company will host a conference call at 2:30 p.m. Pacific Time which can be accessed via a live webcast on Microsoft's Investor Relations website.
- Microsoft creates platforms and tools powered by AI with a mission to empower every person and every organization to achieve more.
- For more information, financial analysts and investors can contact Microsoft's Investor Relations, and for press inquiries, they can reach out to Microsoft Media Relations.
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Pymnts
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AI Antitrust Fears for Big Tech as States Ramp Up Regulation Push
- Tech giants spending over $30 billion on AI startups raises antitrust concerns.
- States introduce nearly 700 AI-related bills, a 400% increase from the previous year.
- Colorado enacts comprehensive AI regulations, becoming the first state to do so.
- Congress considers bills to regulate AI in the workplace, addressing algorithmic bias and employee surveillance.
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Psu
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Platform Holders Must Foster Double-A Games ‘In Between GTA And Among Us,’ Says Ex-Sony Boss Shawn Layden
- Former Sony Interactive Entertainment chairman, Shawn Layden, emphasizes the need for platform holders to support double-A games.
- Layden believes that game development costs for major blockbusters will continue to rise.
- He suggests fostering games between the Grand Theft Auto and Among Us tiers.
- Layden also comments on the closure of SIE Japan Studio and the importance of exclusives in the industry.
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Gizchina
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Windows 11 24H2 Update: Compatibility Hurdles Explained
- Microsoft has implemented safeguards for the Windows 11 24H2 update to prevent problematic installations.
- Devices with known hardware or software issues that could interfere with the installation process will not receive updates.
- Common compatibility issues include problems with ASUS X415KA and X515KA laptops, fingerprint scanners, Intel Smart Sound Technology (SST) drivers, built-in webcams, and certain applications and games.
- Following the recommended steps for resolving compatibility issues can help maintain system stability and a smooth Windows experience.
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Analyticsindiamag
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Microsoft and Salesforce’s AI Agent War Gets Dirty
- Salesforce CEO Marc Benioff criticised Microsoft's Copilot and its new autonomous agent capabilities, comparing the software unfavourably with his own company's AI agent. Benioff said Copilot has proven to be inaccurate, leaking corporate data and providing insufficient accuracy. In contrast, Salesforce's agent autonomously drives sales, service, marketing, analytics and commerce.
- During the announcement, Microsoft chief Satya Nadella said the Microsoft autonomous agents will help customers enhance every individual, team and business function.
- Salesforces' Einstein AI and Einstein GPT enhance functionality such as sales automation, customer service and marketing personalisation; Copilot assists sales, marketing and customer service Bureau staff by providing insights, drafting content, and suggesting next steps.
- Microsoft put its autonomous agents within Dynamics 365- next-generation AI to every line of business.
- Salesforce's agents are embedded into its CRM platform too.
- Flexibility and customisation is where Salesforce excels, whilst Microsoft is taking a more integrated approach by positioning its AI agents across all business functions.
- Salesforces' Einstein AI also provides predictive analytics; its Einstein GTP enhances CRM by content creation and Copilot by creating documents, spreadsheets, presentations and customer communications.
- Meanwhile, Microsoft has introduced Copilot Studio, allowing the customisation of AI agents across a range of wider business functions. It provides a low code/no code platform that enables users to design, manage and scale autonomous agents capable of performing complex tasks without constant human interaction.
- OpenAI's new approach to AI-driven automation for multi-agent AI systems called the Swarm framework has reminded us once again about how AI-driven automation will impact enterprises
- Khosla Ventures-backed DevRev - an AI-native platform for enterprises - aims to help businesses adopt AI easily to simplify operations. Its Conversational AI Builder allows companies to design custom AI agents through a no-code interface, ensuring up to 95% accuracy in completing tasks.
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Insider
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Chanel CEO describes the ChatGPT fail that happened while visiting Microsoft headquarters
- Chanel CEO Leena Nair visited Microsoft to discuss AI integration and testing experiments, including chatbots.
- During the visit, Nair had an awkward interaction with ChatGPT, as it failed to recognize Chanel's female staff and audience.
- Nair expressed her disappointment with ChatGPT's response and urged tech executives to integrate a humanistic way of thinking in AI.
- Chanel is preparing for AI integration, implementing infrastructure systems and testing various experiments, including chatbots on chanel.com.
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