WW 918: Casa Chaos - FY25 Q2 earnings, reasoning models, deprecation

Microsoft reported that it earned a net income of $24.1 billion on revenues of $69.6 billion in the quarter ending December 31, the second quarter of its fiscal 2025. Those figures represent gains of 10 percent and 12 percent year-over-year (YOY), respectively.

Microsoft Earnings Overview

• Not much going on with client-side products and services, so a focus on AI • Productivity and Business Processes: $29.4 billion in revenues, up 14 percent YOY. This was 42.2 percent of Microsoft's earnings • Intelligent Cloud: $25.5 billion in revenues, up 19 percent YOY. This was 36.6 percent of Microsoft's earnings • More Personal Computing: $14.7 billion, unchanged from the year-ago quarter. (Literally flat YOY.) This was 21.1 percent of Microsoft's earnings •

Windows

• Microsoft testing AI-powered search in Windows 11 Dev • New Canary build- Windows Midi Services preview, OneDrive resume, File Explorer folder resume • Microsoft is experimenting with new Windows 11 UIs • Microsoft Edge text rendering comes to all Chromium web browsers on Windows - That only took a few years • Microsoft explains deprecation after using the term for decades

AI

• Week 2 of submitting to our new Chinese overlords • Gemini catapults into the lead for a few days as Gemini 2.0 becomes broadly available • Inspired by DeepSeek, OpenAI releases reasoning model to free ChatGPT • This comes after Microsoft added it to Copilot • Reasoning vs. traditional models • Also, DeepSeek R1 is on Azure AI Foundry and GitHub • Sam Altman discusses DeepSeek, more • OpenAI offers up an AI research assistant

More Earnings (Lightning Round)

• Intel - $14.3 billion in revenues, down 7 percent • AMD: Revenues up 24 percent, market share gains on Intel • Apple - Record $124.2 billion in revenues, up 4 percent • Alphabet/Google: Revenues at $96.47 billion, up 12 percent - CapEx expenditures closing in on MSFT • Samsung - Revenues up 12 percent to $52.2 billion • Spotify is profitable for full year for the first time

Microsoft 365

• Designer makes its way to Photos (Windows) and Microsoft 365 Copilot app (mobile) • Microsoft is removing the VPN from Microsoft 365 Family and Personal • Outlook for Mac to get email recall feature

Xbox

Starfield • is coming to Game Pass Standard this month, more Game Pass titles Forza Horizon 5 • is coming to PS5 • Two Age of Empires • titles are coming to PS5 • Remember that Microsoft partnership with Start.gg? Me neither • Nintendo revenues, Switch sales fall more than expected, will no longer beat DS this fiscal year

Tips and Picks

• Tip of the week: It's time for an online account audit • App pick of the week: Another week of big browser update • RunAs Radio this week: Entra ID Protection with Corissa Koopmans • Margarita of the week: 2 oz white tequila, 1.5 oz Triple Sec, 1 oz fresh lime juice.

Hosts: Leo Laporte and Paul Thurrott

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