The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Keith Weiss - Morgan Stanley & Co. LLC - Analyst
: And echoing Amy's comments, Brett, congratulations on the new role. It's been a pleasure working with you and best of luck in that new role.
Looking at the quarter, another really solid quarter when it comes to commercial bookings. But again, we were a little disappointed on Azure
coming in at the bottom end of the guidance range. Amy, I was hoping you could dig into perhaps what some of those execution issues were,
what the resolution of those issues were. And do we still feel comfortable in the acceleration into the back half of the year that you were talking
about after the June quarter and after last quarter?
Question: Mark Moerdler - Sanford C. Bernstein & Co. - Analyst
: Can you give more color on what drove the four larger than expected Microsoft AI revenue. We talked a bit about the Azure AI component of it.
But can you give more color on that? And our estimates are that the Copilot was much bigger than we expected and growing much faster. Any
more details on the breakdown of what that Microsoft AI would be great.
Question: Brent Thill - Jefferies LLC - Analyst
: Satya, you mentioned DeepSeek a couple of times in your prepared remarks. I think everyone would love your thoughts on what you're seeing
there. And are we seeing AI scale now at lower cost? Are we reaching a mark where you can see that? Or do we still have some time to go?
Question: Karl Keirstead - UBS Securities LLC - Analyst
: Maybe this one as well for Satya, and it's also away from the numbers. But Satya, I wanted to ask you about the Stargate news and the announced
changes in the OpenAI relationship last week. It seems that most of your investors have interpreted this as Microsoft, for sure, remaining very
committed to OpenAI's success. But electing to take more of a backseat in terms of funding OpenAI's future training CapEx needs. I was hoping
you might frame your strategic decision here around Stargate, and Amy, whether there's any takeaway for investors from that decision in terms
of how you're thinking about CapEx needs over the next several years.
Question: Brad Zelnick - Deutsche Bank Securities, Inc. - Analyst
: And I'll echo my congrats and gratitude to Brett as well. Satya, as we think about Microsoft's very rich Copilot portfolio, now having been in market
for over a year, with the products and precision only getting better and the cost of inference coming down, how do you think about the journey
from here and perhaps the ability to package and evolve the go-to-market to address the broadest range of customers and customer requirements
out there.
Question: Brad Reback - Stifel, Nicolaus & Company, Incorporated - Analyst
: That's great. Satya, if you look at several years, any sense of what percent of inference done on Azure will be done on proprietary models versus
open models. And with that said, does it matter to Microsoft at the end of the day?
Question: Brad Sills - BofA Securities, Inc. - Analyst
: Great to hear about the strength you're seeing in copilot. Would love to get some color as to where you're seeing that strength? Is it departmental
deals, customers moving from proof of concept departmental deals, maybe multiple departmental deals in the enterprise. You mentioned some
uptick in usage trends. Would love to get some color on just the common use cases that you're seeing that give you that confidence that, that will
ramp into monetization later.
Question: Brent Bracelin - Piper Sandler & Co. - Analyst
: I wanted to go back to commercial bookings. Commercial RPO, I think, increased 39 billion sequentially. That's the most we've ever seen on a
sequential basis, commercial bookings growth, 75% constant currency. That's 2x higher than we've seen in the last decade. I appreciate there's
some volatility with this metric, but it does feel like this quarter change relative to momentum on backlog and bookings. Can you just talk about
the breadth of where that strength came from? Was it broad-based? Was there a couple of large deals? Any color there would be helpful.
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JANUARY 29, 2025 / 10:30PM, MSFT.OQ - Q2 2025 Microsoft Corp Earnings Call
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