Satya Nadella Said Microsoft's Own AI Chips Are Driving Up to 40% Efficiency Gains. Here's Why That Matters for Investors
Are the best days still ahead for Microsoft's cloud business?
Overview
On July 29, Microsoft (NASDAQ: MSFT) delivered blowout financial results for the fourth quarter of its fiscal year 2026, which ended June 30. The company's cloud computing business was perhaps the biggest story. Microsoft Azure posted 43% year-over-year sales growth, compared to 40% in the previous quarter. The best part is that Microsoft's work in this area should be a meaningful tailwind over the medium term, and the company's CEO, Satya Nadella, gave investors several reasons why. Let's look into one thing he said and what it means for the company's future.
Image source: Microsoft Corporation.
Microsoft offers artificial intelligence (AI) services through its cloud business, including access to Large Language Models, such as those developed by OpenAI -- with which it has a close relationship -- as well as its own internally developed MAI family of LLMs. The company naturally needs significant computing power to run these models. To that end, it has historically relied on external suppliers, including Nvidia (NASDAQ: NVDA). The semiconductor specialist offers the best (in terms of peak raw performance) and most versatile hardware for training and running AI models.
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Originally published at www.fool.com.