Microsoft's latest financial report indicates that its artificial intelligence business is growing at an unprecedented pace, but the growth rate of cloud computing may face a temporary slowdown. During the recent fiscal year 2024 first-quarter earnings call, Microsoft CEO Satya Nadella revealed that the usage of Azure OpenAI services has doubled over the past six months. The AI business is expected to achieve an annualized revenue of $10 billion in the second quarter, setting a record for the company's fastest-growing business.
Amid the rising demand for AI, Microsoft CFO Amy Hood admitted that the company's AI services are currently unable to fully meet market demand. Data shows that the Intelligent Cloud division, which includes the Azure cloud platform, has performed exceptionally well, with revenue growing by 20% year-over-year to $24.09 billion, but it still fell short of analyst expectations.
Nadella pointed out that AI is driving a fundamental transformation in the business application market, with an increasing number of customers shifting from traditional applications to AI-centric business processes. However, Hood expects the growth rate of the Intelligent Cloud business to slow to 18%-20% in the second quarter, with Azure's growth rate expected to drop to 31%-32%, but it is expected to accelerate again in the second half of fiscal year 2025.
As a result of this news, Microsoft's stock fell about 3% in after-hours trading. As of Wednesday's close, the company's stock has risen 15% since the beginning of the year. This reflects investors' cautious attitude towards the company's short-term growth expectations, but the long-term outlook remains positive.
It is worth noting that despite the challenges of a temporary slowdown in growth, Microsoft's rapid development in the AI field is still remarkable. The company is actively expanding its capacity to meet market demand, which indicates that the AI business may continue to maintain a strong growth trend in the future.