Microsoft beat Wall Street estimates for its third-quarter revenue last night, driven by gains from artificial intelligence adoption across its cloud services and business software products.

The company said its revenues had risen to $61.9 billion, up by 17 per cent and exceeding the $60.8 billion, or 15 per cent rise, that had been forecast. Its net income was $21.9 billion, up by 20 per cent from the year before.

Microsoft has been one of the first companies to roll out generative AI products widely to customers, inte­grating the technology into its suite of Microsoft 365 software products such as Excel, Word and Outlook. The $30-a-month Copilot service can draft emails, make presentations and write meeting summaries.

The software group, which was founded by Bill Gates and the late Paul Allen in 1975, has invested about $13 billion in OpenAI, the ChatGPT maker, in exchange for a revenue share and use of its Azure cloud platform, along with stakes in other AI businesses. It also has partnerships with Mistral, of France, and recently hired Mustafa Suleyman, the co-founder of Google DeepMind and the founder of InflectionAI, to head its AI division.

Microsoft owns the Windows operating system, LinkedIn, the social network, and Xbox, the gaming business. It bought Activision Blizzard, the video gaming company, for $69 billion last year after intense scrutiny from competition regulators worldwide. Revenue at LinkedIn was up by 10 per cent in the quarter, Microsoft said, while Office commercial products and cloud revenue were ahead by 13 per cent.

Satya Nadella, the chairman and chief executive of Microsoft, said: “Microsoft Copilot and Copilot stack are ­orchestrating a new era of AI trans­formation, driving better business outcomes across every role and industry”. This week the company announced a five-year $1.1 billion agreement with Coca-Cola to use its AI services and Azure cloud platform.

Its share price has risen by more than 40 per cent since this time last year and it overtook Apple as the world’s most valuable company in January, valued at about $3 trillion. After the results were released Microsoft’s shares were up by $16.76, or 4.2 per cent, at $415.61.

Microsoft said it had invested almost $11 billion this quarter in property and equipment, compared with $6.6 billion in the same quarter last year.

All of the big tech companies are engaged in an expensive race to be at the forefront of the AI revolution. Lee Sustar, principal analyst at Forrester, a research firm, said it is a difficult balance to “plough more into investment to keep up with the demand of early adopters without overbuilding capacity”.

Those companies caught up in the expensive race to develop AI include Meta Platforms, which on Wednesday night said it would spend billions of dollars more than expected on developing the technology including hardware and data centres. Meta shares shed another $52.12, or 10.6 per cent, to close at $441.38 on Thursday.