AI boost prompts Microsoft to reorganise

This reorganisation aims to align with Microsoft’s business operations and offer investors clearer insights into AI’s contributions.
Microsoft revised revenue forecasts after adjusting its reporting structure, aligning with its business management strategy.

Microsoft has revamped its financial reporting structure to better highlight the impact of its AI initiatives. The changes move search and news advertising revenue to the Azure cloud-computing division, while revenue from AI and speech technology services under the Nuance unit now falls within the productivity segment, which houses the Office suite.

The adjustment aligns with how this giant manages its business operations and offers investors clearer insights into AI’s contributions. Following the restructure, Microsoft revised its revenue growth figures for the past fiscal year and adjusted its forecast for the July-September quarter.

Investors are increasingly demanding transparency regarding returns on AI investments, particularly from major tech firms like Microsoft and Google. Microsoft has been one of the few companies to consistently break out AI-related contributions in its earnings reports, noting that AI provided a significant boost to Azure in the June quarter despite a broader slowdown.

The reorganisation has led to changes in company’s revenue expectations. The company now anticipates lower quarterly revenue for its personal computing segment and adjusted forecasts for its productivity and business processes division, reflecting the shift in business unit alignment.