Microsoft Corp. posted its strongest sales increase in six quarters, bolstered by recovering cloud-computing growth amid demand for new artificial intelligence products that are prompting corporate customers to shift back into spending mode.

Revenue in the fiscal first quarter, which ended Sept. 30, rose 13 per cent to $56.5 billion, topping analysts’ average projections. Profit was US$2.99 a share, the company said in a statement Tuesday. Azure cloud-services sales gained 29 per cent, compared with 26 per cent growth in the previous quarter. The shares jumped more than 5 per cent in late trading.

Chief Executive Officer Satya Nadella is revamping the company’s entire product suite, including Office, Windows, search and security software, to add features based on OpenAI technology. The partnership has helped Microsoft lure corporate customers keen to use ChatGPT and other new technologies — which answer questions and generate content — in their own applications. The company, which already counts most businesses as clients of its productivity tools and operating systems, has also been testing a pricier, AI-enhanced version of its Office software.

“If we see stabilization in Azure then the euphoria returns,” said Dan Morgan, senior portfolio manager at Synovus Trust Co. “Enterprise software within tech is probably one of the best spaces now and Microsoft looks pretty strong.”

Microsoft’s shares climbed as high as $349.98 in extended trading following the report, after closing at $330.53 at the close in New York. The stock fell 7.3 per cent in the three months ending in September, a steeper drop than the 3.6 per cent decline posted by the S&P 500 Index during that period. 

The company reported better-than-projected commercial sales, while a steadier personal-computer market helped shore up revenue. Internet search, a service the software maker has imbued with the same technology as ChatGPT, also generated higher sales than forecast, Chief Financial Officer Amy Hood said in an interview. She said Microsoft gained share in markets like cloud, security software and business applications in areas such as finance and customer management.

“It was good execution, the PC market a little better and cloud numbers a little better,” said Hood, explaining why overall quarterly revenue far exceeded her July forecast. “I’m pretty pleased.”

The Redmond, Washington-based company has invested $13 billion in startup OpenAI, a partnership that vaulted the 48-year-old software maker to the forefront of a race to build new applications that let customers generate fresh content from their own data and information scraped from the web. Even as Microsoft has cut jobs and frozen salaries, it has spent heavily on the data centers and chips required for the sprawling AI effort. 

The company said revenue from corporate cloud products rose 24 per cent to $31.8 billion. While AI products have been rolled out all year, Microsoft is still figuring out how best to make money from them. In a major test, the company on Nov. 1 will widely release the corporate version of its Microsoft 365 Copilot, an AI assistant for Office programs like Outlook, Word, PowerPoint and Teams. Customers will pay an extra $30 a month on top of their existing subscriptions. 

In a bid to boost advertising sales and take share from Alphabet Inc.’s Google, Microsoft has added ChatGPT technology to its Bing search engine. Search and news advertising sales increased 10 per cent in the quarter. Microsoft also has started previewing AI-based security software with customers, and says many are signing up for its Azure cloud offering that includes OpenAI tools.

Now, investors are waiting for Microsoft to provide hard data and forecasts on how the new AI products will boost the fortunes of the company’s far-flung divisions, Morgan said. “I saw a commercial during the football game where LG has an AI washing machine — it’s getting ridiculous,” he said of the AI hype cycle. “So we want to know if we are getting to see tangible impact on Microsoft numbers.”

Earlier this month, Microsoft completed its $69 billion purchase of Activision Blizzard Inc. The long-delayed close of the deal — announced in January 2022 — came after the end of the quarter. Hood said Xbox content and services revenue still rose 13 per cent, fueled by the launch of ZeniMax’s Starfield and growth in subscriptions. Still, Microsoft has yet to provide details about how the Activision purchase will address deficiencies in its lineup, particularly in mobile gaming.