Microsoft Corp (NASDAQ:MSFT) has overhauled how it reports on its financial performance to better reflect the impact of artificial intelligence on earnings and revenues.
While a prosaic exercise in corporate messaging, the announcement gives an insight into how Microsoft is adjusting its operations amid the boom in AI technology.
Following the previous reporting period, megacap technology stocks took a hammering as investors began to worry that AI-driven revenues were failing to materialise.
In a particularly bruising session, Microsoft saw $81 billion wiped from its valuation following its fourth-quarter earnings call in July.
In that quarter, Intelligent Cloud revenue, which includes Microsoft's AI-powered Azure Cloud computing platform, fell slightly short of expectations.
But these results may have been skewed by a degree of ‘clutter’ in the reporting segment if Microsoft’s changes are anything to go by.
While that reporting segment will remain the same, certain sub-segments have been removed, allowing for greater transparency in the segmental growth of Microsoft’s AI-powered enterprise-grade cloud offering.
Previously bundled in the Intelligent Cloud segment, the Microsoft 365 cloud-based consumer software platform will now be reported under the Productivity and Business Products segment.
As a result of these adjustments, Microsoft has updated its first-quarter guidance in the Intelligent Cloud segment from 28-29% in constant currency previously to 33% now.