Microsoft just reported a whopping 16% increase in revenue for the first quarter of the fiscal year 2025, reaching a massive $65. 6 billion. This figure not only surpassed what analysts expected but also showed where Microsoft is placing its bets for the future. Instead of relying heavily on traditional software and hardware, they're looking towards the sky—literally, with their cloud computing and AI businesses. The Intelligent Cloud division, which includes Azure, saw a 20% jump in revenue, mainly from commercial clients. Microsoft 365 commercial products and cloud services also saw a nice 13% increase, while the consumer side rose by 5%.

The gaming division was the real star of the show, with Xbox content and services revenue jumping by a staggering 61% compared to last year. This huge jump was thanks in part to Microsoft's acquisition of Activision and some strategic pricing changes in their Xbox Game Pass Ultimate. The release of Call of Duty: Modern Warfare III on Game Pass probably didn't hurt either.

Search and news advertising revenue grew by 18%, while LinkedIn's revenue increased by 10%. Windows OEM and Devices revenue saw a slight 2% increase, with Windows OEM growing but Devices revenue dipping compared to the previous year.

During the earnings call, CEO Satya Nadella made it clear that Microsoft is doubling down on AI, especially for their Copilot feature. He mentioned that their AI business is on track to hit an annual run rate of over $10 billion this quarter. This is great news for Microsoft, but it wasn't all smooth sailing. They had a major hiccup when a faulty CrowdStrike update caused 8. 5 million Windows devices to crash worldwide, affecting retailers, banks, airlines, and their customers. Although this affected less than 1% of all Windows machines globally, it was still a significant setback.

Microsoft's Big Surge: Gaming Leads the Way as Cloud and AI Shine

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