Microsoft's revenue reshuffle signals AI ambitions amid investor pressure

Microsoft has restructured the way it reports results for its business units to include some search and news advertising revenue under the Azure cloud-computing unit—a move designed to put more focus on AI contributions at a time when investors have a growing appetite for AI.

The company said that henceforth, revenue from the AI and speech technology services that its Nuance unit offers would now come under its productivity business, home to the Office suite of apps. Earlier, it was an intelligent cloud division. It said the rejig will help align Microsoft's reporting structure to how its businesses are managed.

The company restated its revenue growth in its divisions for the last fiscal year and revised its forecast for the July-September quarter.

Big tech companies like Microsoft and Google face pressure from investors to show billions of dollars that they have invested in AI infrastructure.

Microsoft is one of the few large companies that break out AI contributions in their quarterly earnings. Most companies have yet to see a big boost from their AI investments.

Last month, the Windows maker reported that AI provided a bigger boost to Azure in the June quarter, even as the overall business was dampened. Microsoft projects growth for Azure to accelerate over the second half of fiscal 2025.

For the first quarter, the company forecasts intelligent cloud revenue of $23.80 billion to $24.10 billion, trimming its previous expectations of $28.6 billion to $28.9 billion.

The company moved some units from the business to the productivity division, trimming quarterly revenue expectations at its personal computing segment to $12.25 billion to $12.65 billion from $14.9 billion to $15.3 billion.

Productivity and business processes revenue would remain in the range of $27.75 billion to $28.05 billion, compared with previous estimates of $20.3 billion to $20.6 billion.