Microsoft’s aggressive push into artificial intelligence (AI) has gained traction among enterprise customers, with the company reporting increased adoption of AI across its product portfolio.
“In total, we now have more than 60,000 Azure AI customers, up nearly 60% year-over-year, and our average spend per customer continues to grow,” CEO Satya Nadella said Tuesday. He told investors at an earnings conference.
The company’s AI strategy spans infrastructure to applications, with Azure as its foundation. “Using Azure AI, we are building app servers for the AI wave and providing access to the most diverse selection of models to meet customer-specific cost, latency, and design considerations.” says Nadella.
Enterprise adoption of Microsoft’s AI tools appears to be particularly strong in the development space. “GitHub Copilot is the most widely adopted AI-powered developer tool,” says Nadella. “In just over two years since its general availability, over 77,000 organizations have adopted Copilot, from BBVA, FedEx, and H&M to Infosys and Paytm, a 180% year-over-year increase.”
Microsoft 365 Copilot, the company’s AI assistant for office workers, is also gaining momentum. “Copilot for Microsoft 365 is becoming a daily habit for knowledge workers as it transforms their work, workflows, and deliverables,” said Nadella. “The number of people using Copilot every day at work has nearly doubled quarter-over-quarter.”
Big companies are putting a lot of effort into this technology. “In total, the number of customers with more than 10,000 seats has more than doubled from last quarter, including Capital Group, Disney, Dow, Kindryl, and Novartis, and EY alone has deployed Copilot to 150,000 employees. “It’s planned,” Nadella said.
However, Microsoft acknowledged that it is experiencing growing pains as it expands its AI infrastructure. CFO Amy Hood addressed this challenge on a conference call: “We’re constrained by our AI capabilities, so we’re actually contracting with third parties to help us out as some of our AI capacity leases have been delayed.”
To meet growing demand, Microsoft is making significant infrastructure investments. “Cloud and AI-related spending represents nearly all of our total capital expenditures,” Hood explained. “About half of that is dedicated to our infrastructure needs, as we continue to build and lease data centers that will support our monetization over the next 15 years. It is primarily dedicated to servers (both CPU and GPU) for serving customers based on demand signals.”
The company’s approach to AI infrastructure is different from previous cloud builds. “When we made this last move, our first move to the cloud, which sometimes seemed like a long time ago, the deployment was very different. And this time, we’re working on a global scale because we have a global need,” Hood said.
Microsoft’s AI strategy extends beyond office productivity to industry-specific solutions. In healthcare, “More than 400 healthcare organizations have purchased DAX Copilot to date, including Community Health Network, Intermountain, Northwestern Memorial Healthcare, and The Ohio State University Wexner Medical Center, with 40% increase quarter over quarter. %,” Nadella reported.
The company is also seeing strong adoption of AI development tools by business users. “To date, more than 480,000 organizations are using the AI-powered capabilities of the Power Platform, a 45% increase quarter-over-quarter,” said Nadella.
Looking ahead, Microsoft plans to continue expanding its AI infrastructure based on demand. Hood said that while there are currently capacity constraints, particularly in the first half of the fiscal year, “in the second half of the year Azure We expect growth to accelerate.”
Nadella emphasized that the company’s AI strategy is based on customer demand and value creation. “We’re now primarily starting from the demand side: What are the product shapes for our product portfolio?”
More information: AI, AI Infrastructure, Amy Hood, Artificial Intelligence, Azure AI, Revenue, GenAI, Generative AI, Microsoft, News, PYMNTS News, Satya Nadella
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