In the wake of Microsoft layoffs, shareholders win as the company reports $27 billion profit and becomes only the second company worth $4 trillion
As we enter the dog days of summer, many companies are reporting their earnings for the previous quarter. Microsoft is among them and according to its latest earnings call, the tech giant hauled in a Scrooge McDuck-esque $27.2 billion in net income, up 24% from the same period last year.
And it can all largely be blamed on AI and Azure, Microsoft's cloud computing platform where the company is heavily investing in AI while it remains the tech industry's obsession du jour.
"Cloud and AI is the driving force of business transformation across every industry and sector," CEO Satya Nadella said in the report. "We're innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75 billion in revenue, up 34 percent, driven by growth across all workloads."
These are numbers and business wins that won't be appealing to the more than 9,000 people that were laid off by Microsoft in the last month across multiple sectors of the business.
Especially after Nadella's inane comments about AI and the layoffs.
"This is the enigma of success in an industry that has no franchise value. Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding," Nadella wrote in a company blog. "But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before."
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According to the financials revenue was up for Microsoft across the board, including in its Xbox, Windows, Microsoft 365 and LinkedIn divisions—just not as much as Azure cloud and AI.
As GamesRadar reports, the company had a choice to cut about four percent of its workforce or reduce some spending on AI. It's obvious which way that axe fell, now that Microsoft has laid off roughly 9,000 people in the last few months and roughly 15,000 so far this year.
Now, investors who don't even work for the company are reaping the profits as Microsoft's AI bet appears to have paid off financially—at least in the short term.
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Fast Company
4 minutes ago
- Fast Company
What's really stopping workers from using AI isn't what you think
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That's not for lack of trying on the company's part, either: Rather than throwing their employees into the AI deep end without guidance (a prevalent issue as AI workflow tools become more common), this company offered dedicated AI teams, adoption incentives, and free training. So, researchers set out to understand what was going wrong. The competence penalty To get to the bottom of this lackluster adoption pattern, the study's authors established an experiment with 1,026 engineers from the same company. The engineers were given a snippet of Python code to evaluate. While the code was the exact same for every participant, each was told that it was created under different conditions—including with or without AI and by a male or female engineer. The results showed that, when participants believed a fellow engineer had used AI to write their code, they rated that engineer's competence 9% lower on average. The competence penalty's severity was also dependent on the reported gender of the engineer. If they were described as male, there was only a 6% competence reduction, compared to 13% for those described as female. Further, the reviewer's own identity and stance on AI had an impact on how they rated others. Engineers who hadn't adopted AI themselves were most critical of AI-users, and male non-adopters penalized female AI-users 26% more harshly than their male AI-using counterparts. Through a follow-up study of 919 engineers, the researchers found that many employees were actually innately aware of this competence penalty, and were avoiding AI usage as a result. advertisement 'Those who most feared competence penalties in the tech industry—disproportionately women and older engineers—were precisely those who adopted AI least,' the study's authors write. 'The very groups who might benefit most from productivity-enhancing tools felt they couldn't afford to use them.' 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There may be a deep-rooted concern that leveraging AI tools may be perceived as cutting corners or reflect poorly on the users' skill level.' How leaders should prepare for the competence penalty Companies like the one in the study shouldn't give up on implementing new AI tools, especially given that agentic AI is predicted to play a huge role in the future of work. Instead, leaders should use this data to put more AI adoption guardrails in place. In their analysis for HBR, the study's authors offer several main steps for managers to consider: Map your organization's penalty hotspots. Leaders should focus on identifying teams where the AI competence penalty might be highest, including those with more women and older engineers reporting to male non-adopters. Monitoring these teams might help to understand where and how the competence penalty is playing out. Convert the influential skeptics. Because non-adopters are the harshest critics of AI users, influential skeptics can have a major impact on the whole team. The study's authors suggest that breaking this cycle requires the skeptics to see respected colleagues successfully using AI without professional consequence. Redesign evaluations to remove the signal. Based on the study's results, flagging a product as 'made with AI' can negatively impact performance reviews. 'The solution is straightforward: Stop signalling AI use in performance evaluations until your culture is ready,' the authors write.
CNBC
35 minutes ago
- CNBC
How GE Vernova found itself in the middle of the frantic race to build out AI
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Manufacturing them is a complex process, and right now supplies are tight. "You may have trouble getting GPUs," Jim Cramer said. "Try getting power from GE Vernova." The fervent demand for GE Vernova's turbines is leading to a financial windfall, as its recent blowout quarterly earnings release made clear. So strong was the report that, in response, Jim described the industrial stock as "maybe the best story in the entire market." Shares of GE Vernova have doubled year to date and are on pace for a fresh record close Monday around $662 a share. Following earnings, the Club raised its price target by $150 on GE Vernova to $700 a share. Orders for its power segment rose 44% organically last quarter as gas power equipment orders, in particular, increased nearly threefold. Meanwhile, a measure of multiyear demand that includes both gas-turbine orders and "slot reservations," which will be fulfilled further into the future, increased to 55 gigawatts, up from 50 in April. 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With strong demand and limited supply, turbine prices have jumped in recent years as well. The reason there's so much need for these turbines is simple: the U.S. needs a lot more electricity to keep up with the demand of AI computing. Club holdings Amazon , Microsoft and other hyperscalers seemingly cannot spend enough money to construct more power-hungry data centers. Alongside earnings last week, Microsoft and Meta reported massive capital expenditures on the back of increased AI investments and signaled that more outlays are on the way. "This is the number one driver of new [turbine] demand growth, especially in the near term," said Sam Huntington, director of North American power research at S & P Global Commodity Insights. "For decades, we had this long period of flat [and] minimal load growth, right up to the past couple of years, and now, the situation has changed again," he told CNBC. Bank of America analysts in a July note forecasted that U.S. electricity demand will grow at a 2.5% compound annual growth rate through 2035, up from half a percent between 2014 and 2024. Many energy executives say more natural gas will be necessary to meet the electricity demand, given some current limitations around solar and wind. Even though projections point to more turbine demand, expanding manufacturing capacity isn't an easy fix. These turbines are massive and complex machinery that can take years to get to customers , so management teams want to make sure that this AI data center buildout is durable before they commit to dramatically scaling up their own production. "They have to balance not building enough to meet data center electricity demand in the future versus making irreversible investment decisions today that might end up costing companies a lot of money over the next 30 years if demand doesn't show up," said Ramteen Sioshansi, an engineering professor at Carnegie Mellon University who leads its Electricity Industry Center. The industry doesn't want a repeat of the early 2000s when there was a similar hype cycle around natural gas power plant construction that ended poorly. Lower natural gas prices — coupled with growing environmental concerns that led to more interest in cleaner alternatives to coal — meant a boom in demand for these turbines at the time. But when gas prices rose again and the collapse of Enron made it harder for power producers to finance new plant construction , demand for gas turbines dried up, leaving manufacturers including GE Vernova — then part of the General Electric conglomerate — with canceled orders and excess inventory. "This led to a huge boom and bust market and people lost a lot of money," S & P Global's Huntington added. "So, there's still scars of 20 years ago [that] are relatively fresh." Plus, in the years leading up to the AI boom, major investments into renewable energy sources like wind and solar around the world also disincentivized turbine manufacturers from expanding their production capacity. That context helps explain why companies like GE Vernova may not want to open up the check book and spend wildly to expand output. At the same time, GE Vernova must maintain a healthy production pace while keeping its customers happy. "I think there's a sense at [GE Vernova] that, 'We're winning the deals that we want to win and, and we don't see a need to potentially risk over-capacitizing the market chasing demand,'" RBC Capital Markets analyst Chris Dendrinos told CNBC. Still, Dendrinos said GE Vernova was "an early mover in terms of expanding capacity" in the industry. In January, GE Vernova announced a $600 million investment in U.S. factories over the next two years to address the growing need for electricity. Of that capital, $300 million is specifically going to support the buildout of its gas turbine business by expanding facilities. It is expected to create more than 850 new jobs. Dendrinos, who has covered the energy sector for over a decade, described the $600 million investment as "absolutely material" and "a testament to the demand" for its turbines. GE Vernova's peers are ramping up production, too. On a February earnings call, Siemens Energy CEO Christian Bruchs said the company is working to grow production capacity by roughly 30%. "However, we take a measured approach and expand our capacities in a responsible way, neither losing sight of cost nor the risk of adding too much capacity," the executive said on the call. Along with the committed capital, GE Vernova has announced deals to expedite production and promoted alternatives to its heavy-duty turbines to maintain its dominance in the industry and please customers. In March, for example, the firm announced an acquisition of Woodward's heavy-duty gas combustion parts business for an undisclosed amount. The move is intended to help the company "meet growing energy demands from load growth," according to a press release. By buying this business, it brings manufacturing of essential combustion parts for these gas turbines in house, which gives GE Vernova more control over its supply chain. Meanwhile, GE Vernova has also touted temporary alternatives to its heavy-duty turbines such as as its "aeroderivative" units. These are mostly preassembled, have faster start times and take up less space than their heavy-duty counterparts. On the other hand, aeroderivatives are less efficient at scale for data centers. GE Vernova announced in March that the company secured an order for three of these units for a municipal utility in Missouri. Overall, GE Vernova is a stellar position to capitalize on the data center buildout. However, Jim said the company could afford to further expand production in order to meet booming demand. "[Their] orders are so strong and ironclad, I wish [they'd] spend some more," he said. (Jim Cramer's Charitable Trust is long GEV, NVDA, AMZN, MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
USA Today
39 minutes ago
- USA Today
Sycamine Capital Management: Gulf Turns to AI Gold Rush
Gulf Nations Accelerate Infrastructure Expansion, Securing Strategic Partnerships, Driving Economic Diversification, and Advancing Computational Technologies and Arabic Language AI Models SINGAPORE, SG / ACCESS Newswire / July 31, 2025 / Gulf nations are intensifying investments in artificial intelligence, marking a significant strategic shift toward technological dominance and economic diversification, according to Sycamine Capital Management. Saudi Arabia alone has dedicated over $40 billion towards AI initiatives under its Vision 2030, positioning itself firmly as a global hub for AI innovation. Analysts widely interpret this development as a clear indication that 'compute is the new oil.' Gulf countries leverage sovereign wealth and advantageous geography to secure central roles in global AI markets. The UAE's ambitious 'Stargate' project, featuring vast data centres hosting international tech giants such as OpenAI, exemplifies this strategic approach. Throughout 2024, AI investments in the region have reached unprecedented levels. Saudi Arabia's Public Investment Fund initiated a $100 billion AI initiative, while the UAE formed a groundbreaking $200 billion tech partnership with the United States. These substantial commitments attracted key global partnerships, including NVIDIA's agreement to supply advanced AI chips to Saudi Arabia's HUMAIN initiative over five years. Sycamine Capital Management highlights the shift of AI from emerging technology to mainstream commercial use across healthcare, finance, manufacturing, and software sectors. Early adopters integrating AI are expected to realise significant returns within the next decade due to improved operational efficiencies and reshaped competitive landscapes. National AI strategies reinforce the Gulf's technological ambitions. Saudi Arabia's National Strategy for Data and AI targets a 12% GDP contribution from AI by 2030. Simultaneously, the UAE aims to revolutionise government operations and boost lucrative sectors, illustrated by Abu Dhabi's $3.5 billion investment to establish the world's first entirely AI-driven government by 2027. Regional sovereign wealth funds actively support these AI advancements through equity investments, infrastructure projects, and international collaborations. Notable partnerships include Saudi Arabia's alliances with Google and Amazon Web Services for AI hubs and large-scale data centres, and Abu Dhabi's G42 collaborations with Microsoft and BlackRock. Furthermore, international technology corporations such as NVIDIA and AMD are deeply embedded in regional AI infrastructure, supplying high-performance hardware. Notably, Saudi Arabia's HUMAIN initiative includes substantial deployments of NVIDIA's GB300 Grace Blackwell AI supercomputers and AMD's $10.3 billion infrastructure project. These developments are complemented by robust Arabic language AI model initiatives, promoting digital sovereignty and addressing linguistic gaps in global AI research. Saudi Arabia's HUMAIN and UAE's Falcon Arabic exemplify such culturally relevant AI systems. Sycamine Capital Management asserts these strategic investments illustrate the Gulf's decisive pivot towards digitally driven economic leadership, significantly influencing global AI landscapes. About Sycamine Capital Management Established in 2008, Sycamine Capital Management Pte. Ltd. provides investors with forward-looking analysis in AI and ESG sectors, identifying opportunities ahead of market trends. For more information, visit Contact: Simon Lau (Media Relations) Email: Website: SOURCE: Sycamine Capital Management View the original press release on ACCESS Newswire
