What's Going On With Microsoft Stock Friday?

Microsoft Corp MSFT stock is trading higher Friday as it flagged the importance of graphics processing units (GPUs) as a critical raw material for its growing cloud business, emphasizing its role in providing AI capabilities.

The company's annual report mentioned GPUs as a risk factor for potential outages lest the company fail to obtain the necessary infrastructure, CNBC reports.

The demand for GPUs surged among top technology companies, driven by the popularity of generative AI, known for human-like text, speech, videos, and images in response to user input.

OpenAI's ChatGPT frenzy has led to a surge in demand for GPUs, benefiting companies like Nvidia Corp NVDA and Advanced Micro Devices, Inc AMD.

Microsoft's data centers rely on GPUs and other components like servers and networking supplies to meet the demand for AI-related computations and services.

Although other large technology companies' recent annual reports, like Alphabet Inc GOOG GOOGL, Apple Inc AAPL, Amazon.Com Inc AMZN, and Meta Platforms Inc META, do not mention GPUs in the same context, Microsoft's report indicates their growing importance.

Microsoft tapped OpenAI, leveraging its Azure cloud for computations related to ChatGPT and other AI models, leading to an increased need for GPUs.

To secure enough GPU capacity, Microsoft has started looking beyond its data centers and signed an agreement with CoreWeave, a cloud service that rents out GPUs to third-party developers.

Microsoft has also been developing its custom AI processor. The company expects to boost capital expenditures, including spending on data centers, CPUs, networking hardware, and GPUs, to support overall capacity expansion.

This week, Microsoft reported fourth-quarter revenue of $56.2 billion, up 8% year-over-year, beating a Street consensus estimate of $55.47 billion. The company reported earnings per share of $2.69, ahead of a Street estimate of $2.55.

It acknowledged its commitment to the new AI platform shift.

Microsoft's session volume reached 16 million vs. a 100-day average of 29 million.

Price Action: MSFT shares traded higher by 2.46% at $338.81 on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.