In a major announcement on Tuesday, Microsoft Corp. revealed that its net profit for the October-December quarter had skyrocketed by 33%. This remarkable increase was largely attributed to the company's significant investments in artificial intelligence (AI) technology, particularly in its cloud-computing unit. Microsoft reported a net income of $21.87 billion, or $2.93 per diluted share, surpassing Wall Street's expectations of $2.79 per share. The software giant also posted an impressive revenue of $62.02 billion for the quarter, marking an 18% increase from the previous year and surpassing analysts' projected revenue of $61.14 billion.

Analysts are now projecting that Microsoft will generate approximately $60.97 billion in revenue for the January-March quarter. Jeremy Goldman, the director of briefings at Insider Intelligence, praised Microsoft's advancements in AI technology, stating that the company is firmly establishing itself as a frontrunner in the AI race. Goldman also suggested that AI technology could help Microsoft expand its share of the digital advertising market. While his firm anticipates that Microsoft's worldwide ad revenues will grow by 12% this year to $14.93 billion, they also note that Google is expected to expand its larger ad business by 10% during the same period.

The recent financial results from Microsoft incorporate the finances of video-game maker Activision Blizzard, which the company officially acquired on October 13 for a staggering $69 billion. The merger with Activision Blizzard boosted Microsoft's revenue growth by four points, according to James Ambrose, the company's director of investor relations. However, the acquisition also resulted in a decrease in operating profits by approximately $440 million due to purchase accounting adjustments and integration and transaction costs.

Following the announcement, Microsoft's shares experienced a slight decline in after-hours trading, dropping almost 2% to $400.86. Despite this, the company's cloud-focused business segment outperformed its other divisions, with revenue expanding by 20% from the same period last year to reach $25.9 billion for the quarter. The revenue from Microsoft's Office suite of workplace products and the LinkedIn professional social network also saw significant growth, increasing by 13% to $19.2 billion. Additionally, the Windows-led personal computing business, which includes the Xbox video games and services, experienced a 19% growth, reaching $16.9 billion. These figures were largely influenced by the addition of Activision Blizzard to the segment.

Notably, Microsoft's Xbox-related revenues witnessed a remarkable 61% growth in the quarter. However, the company clarified that 55 points of this figure were attributed to the addition of Activision, renowned for producing the highly successful Call of Duty series of games. With its impressive financial performance and strong focus on AI technology, Microsoft is poised to continue its upward trajectory in the tech industry.