Microsoft surpassed analyst expectations on Tuesday, as its heavy investment in artificial intelligence (AI) produced good results, especially for its Azure cloud computing unit.

According to The Guardian, the tech giant reported revenue of $62 billion for the second quarter of the 2024 fiscal year, up 18% from last year, exceeding expected earnings of $61.1 billion. Its profits jumped 33% to $21.9 billion in the three months through December. 

"We've moved from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we're winning new customers and helping drive new benefits and productivity gains across every sector," Microsoft CEO Satya Nadella said.

According to the earnings report, Microsoft Cloud revenue surged 24% from last year, while its Xbox content and services division's revenue rose 61% due to the Activision Blizzard acquisition. Four percent of the company's overall revenue comes from Activision.

So far, only two companies have reached the $3 trillion market capitalization mark: Microsoft and Apple. Microsoft overtook Apple as the world's most valuable company last week.

Heavy Bets of Microsoft on AI

Microsoft is now a leading player in the realm of AI due to its own efforts and close ties to OpenAI. The tech giant has invested $13 billion into the ChatGPT maker and represents its biggest shareholder, with a stake of around 49%.

Microsoft's rapid investment in AI has drawn the attention of regulators. However, shares still jumped 10% over the past month as investors ignored increasing concerns.

The US Federal Trade Commission had already started investigating Microsoft's $10 billion investment in OpenAI and agreements made by Google, Amazon, and Anthropic. 

READ ALSO: Microsoft Launches Copilot AI Assistant for Small Businesses and Consumers

First Time Microsoft Reported Earnings With Activision Blizzard

This quarter marks the first time Microsoft reported earnings with Activision Blizzard, which is the video game developer behind hits like "World of Warcraft," "Call of Duty," and "Overwatch." After a lengthy regulatory battle, Microsoft finalized its purchase of Activision last October for $69 billion.

Last week, Microsoft dismissed 1,900 employees across its gaming division, including those working in Activision and some on the Xbox console, citing redundancies within the two firms.

READ MORE: OpenAI Launches GPT Store, New Subscription Tier for Teams