Satya Nadella insists that people are using Microsoft Copilot AI more and more

Microsoft reported strong earnings on Wednesday with revenue of $81.3 billion for the quarter (up 17%), net profit of $38.3 billion (up 21%), and Microsoft’s cloud gaming revenue of more than $50 billion.

But the stock rose on Thursday as investors worried about the tech giant’s spending to build its cloud and questioned whether the investment would pay off. Microsoft CEO Satya Nadella says the answer to that question is yes — and he spent a lot of time on the phone trying to make that point.

Microsoft has spent as much on capital expenditures in the first half of its fiscal year as it did in the previous year. And the numbers are big: Microsoft to destroy $88.2 billion in revenue last year and has spent $72.4 billion so far this year.

Most of the applications are for deploying AI to businesses and large AI labs, especially OpenAIand Anthropic. The big question on the minds of investors is: Will the money turn into more use and ultimately profit?

Marketers are worried that Microsoft’s main cloud products, Azure, and its Microsoft 365 software haven’t grown as fast as they wanted.

“The fact that the two components of Azure and M365 decreased slightly is a concern we feel,” UBS Wall Street analyst Karl Keirstead wrote in a note on Thursday. (Keirstead doesn’t mind it, though, and recommends buying the stock.)

However, a few months ago, reports were published that people didn’t want to use Microsoft’s AI, even Copilot is woven into all kinds of Microsoft products.

Nadella spent much of his tenure doing what is best described as AI using PR. Despite her moves, some of the numbers she gave were very beautiful.

For example, Nadella said the number of daily users of Copilot AI is growing “about 3x per year.” That means AI chat, news feeds, search, browsing, shopping, and “integrated into the operating system.”

As for the number of users they represent, they did not say. (We’ve reached out to Microsoft and asked.)

Last year, in its annual reportthe company said it had more than 100 million monthly Copilot users, but that counted both commercial and consumer users.

He was at the forefront of Microsoft’s coding AI, GitHub Copilot, saying it now has 4.7 million paid subscribers, up 75% year-on-year. That seems like good business. Last year, in its annual report, Microsoft said that GitHub Copilot had 20 million users, a number that includes those who choose the free version.

He also said that Microsoft 365 Copilot now has 15 million paid seats from companies that buy their employees. This is based on 450 million paid seats, the company said.

And Nadella called the growth of Dragon CopilotMicrosoft’s AI healthcare assistant for healthcare professionals (competitor super founder Harvey). He said the drug is available to 100,000 healthcare providers and was used to record 21 million patient encounters this quarter, three times the annual rate.

Will the billions spent on data centers be worth it? Nadella apparently thinks so. He and CFO Amy Hood said on the call that they find that the demand for AI services in all products exceeds the amount of data, so all new equipment is kept for its full lifespan.