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DeeperML
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Microsoft has released its Q2 financial results, revealing a robust performance in its cloud and AI sectors. The company reported a 12% year-over-year revenue increase, reaching $69.6 billion, and a 10% rise in net income to $24.1 billion. The Intelligent Cloud segment, particularly Azure and other cloud services, was a major driver, seeing a 31% year-over-year growth. Microsoft’s AI business is booming, with its annual revenue run rate now exceeding $13 billion, marking an impressive 175% increase from last year. Microsoft 365 Commercial products and cloud services also demonstrated strong growth, rising by 15% year-over-year.
Despite the overall positive results, Microsoft's gaming division faced some headwinds. Gaming revenue experienced a 7% decline, and Xbox hardware revenue dropped significantly by 29%. However, Xbox content and services revenue showed a modest 2% growth, fueled by the popularity of Xbox Game Pass, which set a new quarterly revenue record. Additionally, Xbox Cloud Gaming saw a record 140 million hours streamed. Microsoft is also noted to be integrating DeepSeek's R1 AI model, which could potentially improve AI infrastructure costs, as it was noted that cost efficiencies are key. The company is focusing on growing its services as well as the games, and are moving away from hardware.
References :
Despite the overall positive results, Microsoft's gaming division faced some headwinds. Gaming revenue experienced a 7% decline, and Xbox hardware revenue dropped significantly by 29%. However, Xbox content and services revenue showed a modest 2% growth, fueled by the popularity of Xbox Game Pass, which set a new quarterly revenue record. Additionally, Xbox Cloud Gaming saw a record 140 million hours streamed. Microsoft is also noted to be integrating DeepSeek's R1 AI model, which could potentially improve AI infrastructure costs, as it was noted that cost efficiencies are key. The company is focusing on growing its services as well as the games, and are moving away from hardware.
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References :
- www.techmeme.com: TechMeme article summarizing Microsoft's Q2 revenue, Microsoft 365 performance, and net income.
- www.cnbc.com: CNBC article on Microsoft's Q2 earnings, emphasizing the performance of Intelligent Cloud and Azure.
- Source Asia: Microsoft's press release detailing its Q2 financial results.
- The Verge: The Verge article reporting Microsoft's Q2 2025 earnings report and business performance.
- Techmeme: Microsoft Q2: Windows OEM and Devices revenue up 4% YoY, gaming revenue down 7%, Xbox hardware revenue down 29%, and Xbox content and services revenue up 2% (Jay Peters/The Verge)
- www.theverge.com: Microsoft adds DeepSeek's R1 to Azure AI Foundry and GitHub, and plans to make a distilled, smaller version of R1 available to run locally on Copilot+ PCs soon