Microsoft reported a 20% increase in profit for the January-March quarter, positioning itself as a leader in applying artificial intelligence technology to enhance workplace productivity. The Redmond-based software giant posted a quarterly net income of $21.93 billion, or $2.94 per share, surpassing Wall Street expectations. Revenue for the period reached $61.86 billion, up 17% from the previous year, with analysts predicting $60.86 billion.

While Microsoft does not disclose specific revenue figures for AI products like its Copilot chatbot, it has integrated the technology into its core business segments, including cloud computing and productivity services. Revenue from the cloud computing division grew to $26.7 billion, a 21% increase, while productivity services revenue rose 12% to $19.6 billion.

Businesses are paying Microsoft $30 per employee per month to access AI features like Copilot, but Gartner analyst Jason Wong noted that some customers are still exploring practical uses for generative AI that justify the cost. Microsoft has heavily invested in AI through partnerships with OpenAI and the development of new language models like Phi-3.

However, Microsoft faces challenges in its legacy computer services, with a recent federal cybersecurity report criticizing the company's cybersecurity practices and corporate culture. The report highlighted vulnerabilities that allowed state-backed Chinese cyber operators to breach email accounts of senior U.S. officials, calling for an overhaul of Microsoft's security culture.

Despite these challenges, Microsoft's personal computing business, which includes licensing its Windows operating system, saw a 17% increase in revenue to $15.6 billion for the quarter. Microsoft stock rose approximately 5% in after-hours trading following the earnings report. Clients are closely monitoring Microsoft's response to cybersecurity concerns, with a focus on enhancing internal policies for security measures.