As an “AI benchmark,”$Microsoft (MSFT.US)$The latest financial report shows that the giant will continue to bet heavily on the AI route.

Overnight, Microsoft released its fourth fiscal quarter report. Although revenue and profit for this quarter all exceeded Wall Street expectations, the cloud service business revenue growth rate has slowed, the impact of AI has not yet been shown, and capital expenditure on AI services is still accelerating. Microsoft's stock price fell after the market.

Financial reports show that Microsoft's revenue for the fourth fiscal quarter increased 8% year on year to 56.2 billion US dollars, higher than market expectations of 55.2 billion US dollars; net profit per share after dilution increased 21% year on year to 2.69 US dollars, higher than market expectations of 2.56 US dollars; the capital expenditure that the market is concerned about was 8.94 billion US dollars, also higher than market expectations of 7.85 billion US dollars.

Looking at the full fiscal year, Microsoft's revenue slowed to 7% year on year, lower than the growth rate of more than 10% in the past five fiscal years.And this quarter's capital expenditure reached the highest total amount in a single quarter since at least FY2016.

Meanwhile, Azure and other cloud service business revenue grew 27% year over year after deducting exchange rate changes.Further slowdown compared to the 31% growth rate in the previous quarterMicrosoft also expects the revenue growth rate to slow further to 25%-26% in the first quarter of fiscal year 2024.

In a conference call after the earnings report, Microsoft CFO Amy Hood said that as Microsoft pushes up costs by building new data centers to support AI,Microsoft's capital expenditure will continue to rise every quarter throughout fiscal year 2024, capital expenditure will be used for data centers, CPU chips, GPU chips, and network equipment.

In after-hours trading, Microsoft shares fell nearly 4%.

AI's impact “will be evident in the second half of the fiscal year”

So far, Microsoft's investment in AI has not given a significant boost to revenue.

Most of Microsoft's main product lines are already connected to a series of new artificial intelligence programs based on the OpenAI model, and market demand for this service is also surging.

Still, Microsoft's Office productivity suite with embedded AI components isn't widely used, and after several years of increasing enterprise investment, the company's overall spending on Azure cloud services and Office apps is slowing. Meanwhile, Microsoft PC shipments declined for the sixth consecutive quarter, eroding sales of Windows software and Surface devices.

Hood said,Although Copilot isn't ready for full launch, demand for Microsoft's artificial intelligence services is strong and leading, and the impact of this product line will be felt in the second half of the new fiscal year.

Speaking about AI technology, Microsoft Chairman and CEO Satya Nadella is optimistic about the final opportunities Microsoft Copilot presents:

Companies must not only ask how — but how quickly — to apply the next generation of artificial intelligence safely and responsibly to meet the biggest opportunities and challenges they face.We remain focused on leading the transformation of new artificial intelligence platforms to help customers get the most value from their digital spend using Microsoft Cloud and increase operational leverage.

I do think people will consider how these Copilots can be used to supplement their operating expenses to improve efficiency,Frankly speaking, it can even reduce the burden of operating expenses and personnel.

Earlier this month, Microsoft announced that its Office 365 Copilot will be priced at $30 per user per month. This means that business users currently using Office 365 will pay an additional $30/month if they need to use Copilot.

According to some analysts, Microsoft's pricing is too aggressive and expensive. Some analysts also believe that this move will boost Microsoft's revenue.

Wedbush analyst Dan Ives believes:

The pricing announced this time will expand Microsoft's cloud computing artificial intelligence market opportunities, increasing cloud computing annual revenue by 20% as soon as 2025.

Citibank analyst Tyler Radke also wrote:

The price is much higher than our forecast of $5 to $20 per month. Although it may be several months until full listing, we think this is a huge benefit.

edit/ruby