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Microsoft reported<\/a> quarterly earnings that impressed investors and showed how resilient the company is even as it spends heavily on AI.<\/p>\n Some investors have been uneasy about the company’s aggressive spending on AI, while others have demanded it. During this quarter, Microsoft reported that it spent $20 billion on capital expenditures, nearly double what it had spent during the same quarter last year.<\/p>\n However, the company satisfied both groups of investors, as it revealed it has still been doing well in the short term amid those long-term investments. The fiscal quarter, which covered July through September, saw overall sales rise 16 percent year over year to $65.6 billion. Despite all that AI spending, profits were up 11 percent, too.<\/p>\n The growth was largely driven by Azure and cloud services, which saw a 33 percent increase in revenue. The company attributed 12 percent of that to AI-related products and services.<\/p>\n Meanwhile, Microsoft’s gaming division continued to challenge long-standing assumptions that hardware is king, with Xbox content and services posting a 61 percent increase in year-over-year revenue despite a 29 percent drop in hardware sales.<\/p>\n Microsoft has famously been inching away from the classic strategy of keeping software and services exclusive to its hardware, launching first-party games<\/a> like Sea of Thieves<\/em> not just on PC but on the competing PlayStation 5 console from Sony. Compared to the Xbox, the PlayStation is dominant in sales and install base for this generation.<\/p>\n But don’t make the mistake of assuming that a 61 percent jump in content and services revenue is solely because Microsoft’s Game Pass subscription service is taking off. The company attributed 53 points of that to the recent $69 billion Activision acquisition<\/a>.<\/p>\n<\/p><\/div>\n