Microsoft is ‘in the lead’ with new cloud-based A.I. workloads, CEO Nadella says
Microsoft CEO Satya Nadella speaks during a keynote address announcing ChatGPT integration for Bing at Microsoft in Redmond, Washington, Feb. 7, 2023.
Jason Redmond | AFP | Getty Images
Satya Nadella couldn’t help himself. He had something to brag about, and he did it on Microsoft’s painstakingly followed hourlong earnings call with analysts on Tuesday. Never mind that the stock was down about 4% after hours.
Nadella said that while Microsoft isn’t the largest provider of cloud infrastructure for other companies to use to run apps and websites (that would be Amazon, with an estimated 40% share compared to Microsoft’s 20.5%), the company is No. 1 when it comes to selling cloud-based AI services. That category is small but growing quickly after startup OpenAI’s ChatGPT chatbot, which is hosted on Azure, went viral at the end of 2022.
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A bigger artificial intelligence business might help Microsoft grow its position in cloud computing overall. On Tuesday, Microsoft said Azure and other cloud services increased by 26% year over year, faster than all other major product areas other than the Dynamics 365 cloud-based enterprise software.
Historically, Microsoft cares deeply about being dominant. For decades it has done that in PC operating systems with Windows and productivity software with Office. Since becoming CEO in 2014, Nadella has overseen a company that has continued to operate some laggards, including the Bing search engine, Surface PCs and Azure.
But in recent months Microsoft has been on a speed run to sell access to OpenAI’s underlying large language models in Azure to companies big and small, and some entrepreneurs have chosen to use them instead of models from Amazon, Google or startups.
Simultaneously, Microsoft is weaving the models into its own software, including Bing and Windows. Microsoft maintains a deep relationship with OpenAI after having invested billions into the startup.
What’s unclear is how much revenue Microsoft can accumulate from Azure AI services that depend on OpenAI’s technologies, and how much extra revenue that will bring in from companies using non-AI services in Azure. But Nadella sounded hopeful about Microsoft’s prospects in those areas.
“If you think about Azure, we have grown Azure over the years, coming from behind, and here we are as a strong No. 2 — in the lead when it comes to these new workloads,” he said. “So, for example, we are seeing new logos, customers who may have used another cloud for most of what they do are for the first time sort of starting to use Azure for some of their new AI workloads. We also have even customers who have used multiple clouds who used us for a class of sort of workloads also start new projects in data and AI, which they were using other clouds for.”
The concept of AI has been around longer than Microsoft, and Microsoft has been running AI models for other companies for several years. But ChatGPT and image-generation tools such as Adobe’s Firefly have kicked off fresh interest in generative AI, which involves taking a picture or other human input and creating new content with it.
Nadella told analysts to expect the company to win more market share and reduce the cost of acquiring customers.
“And so, yes, we celebrate,” he said.
That’s the reason Microsoft has disclosed how much of the expected Azure cloud growth will come from AI for the past two quarters, Nadella said.
Amy Hood, Microsoft’s finance chief, said on the call that in the fiscal first quarter, which will end on Sept. 30, Azure revenue should grow by 25% to 26% in constant currency, including 2 points from AI services. That could be worth hundreds of millions of dollars in new Azure AI revenue.
“There are two parts to even the AI,” Nadella said. “There is the models themselves, with our partnership with OpenAI. That’s sort of one type of spend on compute. And the other is much more revenue-driven, which is we will track the inference cost to the revenue and demand. And you’re already seeing both of those play out.”
WATCH: The question is how soon will we see A.I. hit Microsoft’s income statements: Adam Crisafulli
An attendee wearing a Super Mario costume uses a Nintendo Switch 2 game console while playing a video game during the Nintendo Switch 2 Experience at the ExCeL London international exhibition and convention centre in London, Britain, April 11, 2025.
Isabel Infantes | Reuters
Nintendo on Friday announced that retail preorder for its Nintendo Switch 2 gaming system will begin on April 24 starting at $449.99.
Preorders for the hotly anticipated console were initially slated for April 9, but Nintendo delayed the date to assess the impact of the far-reaching, aggressive “reciprocal” tariffs that President Donald Trump announced earlier this month.
Most electronics companies, including Nintendo, manufacture their products in Asia. Nintendo’s Switch 1 consoles were made in China and Vietnam, Reuters reported in 2019. Trump has imposed a 145% tariff rate on China and a 10% rate on Vietnam. The latter is down from 46%, after he instituted a 90-day pause to allow for negotiations.
Nintendo said Friday that the Switch 2 will cost $449.99 in the U.S., which is the same price the company first announced on April 2.
“We apologize for the retail pre-order delay, and hope this reduces some of the uncertainty our consumers may be experiencing,” Nintendo said in a statement. “We thank our customers for their patience, and we share their excitement to experience Nintendo Switch 2 starting June 5, 2025.”
The Nintendo Switch 2 and “Mario Kart World“ bundle will cost $499.99, the digital version “Mario Kart World” will cost $79.99 and the digital version of “Donkey Kong Bananza” will cost $69.99, Nintendo said. All of those prices remain unchanged from the company’s initial announcement.
However, accessories for the Nintendo Switch 2 will “experience price adjustments,” the company said, and other future changes in costs are possible for “any Nintendo product.”
It will cost gamers $10 more to by the dock set, $1 more to buy the controller strap and $5 more to buy most other accessories, for instance.
WATCH: Nintendo has ‘a lot of work to do’ to convince casual users to upgrade to Switch 2: Kantan Games
An employee walks past a quilt displaying Etsy Inc. signage at the company’s headquarters in the Brooklyn.
Victor J. Blue/Bloomberg via Getty Images
Etsy is trying to make it easier for shoppers to purchase products from local merchants and avoid the extra cost of imports as President Donald Trump’s sweeping tariffs raise concerns about soaring prices.
In a post to Etsy’s website on Thursday, CEO Josh Silverman said the company is “surfacing new ways for buyers to discover businesses in their countries” via shopping pages and by featuring local sellers on its website and app.
“While we continue to nurture and enable cross-border trade on Etsy, we understand that people are increasingly interested in shopping domestically,” Silverman said.
Etsy operates an online marketplace that connects buyers and sellers with mostly artisanal and handcrafted goods. The site, which had 5.6 million active sellers as of the end of December, competes with e-commerce juggernaut Amazon, as well as newer entrants that have ties to China like Temu, Shein and TikTok Shop.
By highlighting local sellers, Etsy could relieve some shoppers from having to pay higher prices induced by President Trump’s widespread tariffs on trade partners. Trump has imposed tariffs on most foreign countries, with China facing a rate of 145%, and other nations facing 10% rates after he instituted a 90-day pause to allow for negotiations. Trump also signed an executive order that will end the de minimis provision, a loophole for low-value shipments often used by online businesses, on May 2.
Temu and Shein have already announced they plan to raise prices late next week in response to the tariffs. Sellers on Amazon’s third-party marketplace, many of whom source their products from China, have said they’re considering raising prices.
Silverman said Etsy has provided guidance for its sellers to help them “run their businesses with as little disruption as possible” in the wake of tariffs and changes to the de minimis exemption.
Before Trump’s “Liberation Day” tariffs took effect, Silverman said on the company’s fourth-quarter earnings call in late February that he expects Etsy to benefit from the tariffs and de minimis restrictions because it “has much less dependence on products coming in from China.”
“We’re doing whatever work we can do to anticipate and prepare for come what may,” Silverman said at the time. “In general, though, I think Etsy will be more resilient than many of our competitors in these situations.”
Still, American shoppers may face higher prices on Etsy as U.S. businesses that source their products or components from China pass some of those costs on to consumers.
Etsy shares are down 17% this year, slightly more than the Nasdaq.
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