Microsoft delivers strong cloud & AI performance despite DeepSeek's worries

Microsoft is still printing a lot of money thanks to its strong cloud & AI commercial performances, despite worries that sparked after DeepSeek’s arrival.

For the quarter ending December 31, 2024, the company’s revenue in productivity and business reached $29.4 billion. That’s a 14% growth, driven (mostly, but not only) by a 16% increase in Microsoft 365 Commercial cloud services.

Its revenue in the intelligent cloud segment also reached $25.5 billion, up 19%, with server products and cloud services, particularly Azure, contributing to a 31% revenue growth.

DeepSeek’s arrival in the AI boom is not just some “China made a faster AI chatbot” thing, because caused a lot of anxiety and panic in the US market that it lost over $1 trillion. Both Nvidia and Microsoft were among the tech firms that lost their stock value during the whole fiasco.

Microsoft is then quickly moving to secure the open-source model, which has been the subject of controversies for its censorship from the Chinese government. The DeepSeek R1 model will soon be available on Copilot+ PCs with Snapdragon X chips, and developers can also try out its NPU-polished version on Azure AI & GitHub.

In its overall quarterly success, the Redmond tech giant said that it’s made a 12% increase year-over-year in overall revenue, with a total of $69.6 billion. The company’s operating income also rose by 17% to $31.7 billion, while net income grew 10% to $24.1 billion.

Both Microsoft and OpenAI are currently investigating DeepSeek amid concerns it may have improperly accessed OpenAI’s technology through its API. DeepSeek has been praised for its cost-efficiency even by Microsoft’s higher-ups, claiming to have developed its AI with older Nvidia H100 GPUs and just $6 million.