Microsoft Corporation has reported its second-quarter earnings for the fiscal year 2025, surpassing market expectations and showcasing its strong position in the technology sector. The company announced an earnings per share (EPS) of $3.23, marking a 10% increase from the previous year, along with a revenue of $69.6 billion, up 12% compared to the same period last year. This performance exceeded Wall Street's predictions of $3.11 per share on revenue of $68.9 billion.
Microsoft's data cloud business played a significant role in this success, generating $40.9 billion in revenue, an impressive 21% increase year-over-year. Furthermore, the company's artificial intelligence (AI) business has achieved an annual revenue run rate of $13 billion, representing a remarkable 175% growth from the previous year. This growth underscores Microsoft's strategic focus on AI and its potential to drive future revenues.
However, the company's AI efforts face scrutiny as reports emerged of unauthorized data output from OpenAI's technology being accessed by a group linked to DeepSeek, a Chinese company. DeepSeek claims its AI model can achieve results comparable to U.S. companies at a fraction of the cost, causing significant market reactions. The news led to a sell-off in AI-exposed companies, with Nvidia suffering a market capitalization loss of approximately $600 billion.
Microsoft and OpenAI are actively investigating the situation. Microsoft CEO Satya Nadella acknowledged DeepSeek's advancements but emphasized that such innovations are part of the ongoing evolution in AI and computing.
“We remain very happy with the partnership with OpenAI.” – Satya Nadella
“We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead,” – Satya Nadella
The company remains committed to its AI initiatives, planning to invest $80 billion in AI spending this year. This move aligns with similar commitments from other tech giants like Meta, as U.S. companies race to gain a competitive edge in the AI domain. The collective market value of seven leading tech companies—Meta, Microsoft, Alphabet, Amazon, Apple, Nvidia, and Tesla—has surged by $5 trillion over the past year.
“For a hyperscaler like us, this is all good news,” – Satya Nadella
The tensions surrounding DeepSeek have prompted reactions from U.S. officials as well. David Sacks, the U.S. government's AI and crypto czar, commented on the situation, highlighting concerns over intellectual property theft.
“gonna be much better than anyone is ready for” – Sam Altman