Microsoft said Wednesday that its profit for the October-December quarter grew 10% as it works to capitalize on the huge amounts of money it has spent to advance its artificial intelligence technology.
But while its overall profits and revenue beat Wall Street expectations, it slightly missed projections for its closely-watched cloud computing business, a centerpiece of its AI efforts.
The company reported net income for the quarter of $24.1 billion, or $3.23 per share, beating Wall Street expectations of $3.11 per share. The Redmond, Washington-based software maker posted revenue of $69.6 billion in the quarter, up 12% from the previous year, also beating expectations.
Analysts polled by FactSet Research expected Microsoft to generate revenue of $68.87 billion in the last three months of the year.
Sales from Microsoft’s cloud-focused business segment that includes its flagship Azure computing platform grew 19% from the same time last year to $25.5 billion, which was less than the $25.83 billion forecast by FactSet analysts.
Microsoft’s productivity business segment, which includes its Office suite of email and other workplace products, grew 14% to $29.4 billion.
Its personal computing business, led by its Windows division, remained steady at $14.7 billion, with a drop in consumer device sales offset by growth in advertising revenue tied to the Bing search engine.
Microsoft shares dropped 5% in after-hours trading Wednesday but were still higher than Monday, when the tech giant was hit by a broader tech stock sale caused by a frenzy over the new ChatGPT competitor developed by Chinese tech startup DeepSeek.
Microsoft is a close partner of ChatGPT maker OpenAI and also sells its own AI chatbot services, branded as Copilot. Part of what drove the Wall Street panic this week was concern over the startup's claims that it was catching up to U.S. tech titans on a fraction of their budget.
Microsoft CEO Satya Nadella downplayed those concerns on an investor call Wednesday, saying “DeepSeek had some real innovations” and it is good to have efficiency gains and lower prices in AI development because it “means people can consume more and there’ll be more apps written.”
Microsoft also added DeepSeek's latest AI model to those available on its Azure computing platform Wednesday.
Building and operating AI systems is costly, and Microsoft has said it plans to spend $80 billion this year as it expands its global network of energy-hungry computing centers and supplies them with specialized chips to train and run AI models.
“We have more than doubled our overall data center capacity in the last three years and we have added more capacity last year than any other year in our history,” Nadella said.
FILE - Microsoft CEO Satya Nadella speaks during the Microsoft Ignite conference, Tuesday, Nov. 19, 2024, in Chicago. (AP Photo/Charles Rex Arbogast, File)
A Ukrainian drone strike killed one person and wounded three others in the Russian city of Voronezh, local officials said Sunday. Meanwhile, thousands of residents were still without power in Kyiv, following an intense Russian bombardment.
A young woman died overnight in a hospital intensive care unit after debris from a drone fell on a house during the attack on Saturday, Voronezh regional Gov. Alexander Gusev said on Telegram.
Three other people were wounded and more than 10 apartment buildings, private houses and a high school were damaged, he said, adding that air defenses shot down 17 drones over Voronezh. The city is home to just over 1 million people and lies some 250 kilometers (155 miles) from the Ukrainian border.
Ukraine's General Staff said Sunday said its forces hit three drilling platforms operated by Russian oil giant Lukoil in the waters of the Caspian Sea. Ukraine’s long-range drone strikes on Russian energy sites aim to deprive Moscow of the oil export revenue it needs to pursue its full-scale invasion.
The attacks came after Russia bombarded Ukraine with hundreds of drones and dozens of missiles overnight into Friday, killing at least four people in the capital Kyiv, according to Ukrainian officials. For only the second time in the nearly four-year war, Russia used a powerful new hypersonic missile that struck western Ukraine in a clear warning to Kyiv and NATO.
Ukraine’s largest private energy supplier, DTEK, said Sunday that 30,000 people in Kyiv were still without power following the attack. Mayor Vitali Klitschko said Friday around half the apartment buildings — nearly 6,000 — in snowy Kyiv were left without heat in daytime temperatures of about minus 8 degrees Celsius (17.6 Fahrenheit).
The intense barrage and the launch of the nuclear-capable Oreshnik missile followed reports of major progress in talks between Ukraine and its allies on how to defend the country from further aggression by Moscow if a U.S.-led peace deal is struck.
Ukrainian President Volodymyr Zelenskyy said Saturday in his nightly address that Ukrainian negotiators “continue to communicate with the American side.”
Chief negotiator Rustem Umerov was in contact with U.S. partners on Saturday, he said.
Separately, Ukraine’s General Staff said Russia targeted Ukraine with 154 drones overnight into Sunday and 125 were shot down.
The Ukrainian Defense Ministry’s main intelligence directorate said Sunday that Russia this month deployed the new jet-powered “Geran-5” strike drone against Ukraine for the first time. The Geran is a Russian variant of the Iranian-designed Shahed.
According to the directorate, the drone can carry a 90-kilogram (200-pound) warhead and has a range of nearly 1,000 kilometers (620 miles).
Follow the AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine
This photo provided by the Ukrainian Security Service on Friday, Jan. 9, 2026, shows a fragment believed to be a part of a Russian Oreshnik intermediate range hypersonic ballistic missile that hit the Lviv region. (Ukrainian Security Service via AP)
President of Ukraine Volodymyr Zelenskyy, second left, listens to British Defense Secretary John Healey during their meeting in Kyiv, Ukraine, Friday, Jan. 9, 2026. (AP Photo/Danylo Antoniuk)
