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As Microsoft expands its artificial intelligence (AI) across all parts of its business, Satya Nadella, the company’s CEO, gave an upbeat forecast for that technology and also its game business after closing on its acquisition of third-party video game giant Activision in October.

“We’ve moved from talking about AI to applying AI at scale,” he told analysts on Jan. 30, during Microsoft’s earnings call for its second quarter (ended Dec. 31) that was also webcast.

“By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains,” he said.

Meanwhile, in the first quarter that included Activision as part of Microsoft’s game business, Nadella said: “We set all-time records for monthly active users on Xbox, PC, as well as mobile  where, we now have over 200 million monthly active users alone, inclusive of Activision Blizzard King .” Activision acquired Blizzard Entertainment in 2008 and King Digital Entertainment in 2016.

Now, with Microsoft’s acquisition of Activision, “we’ve added hundreds of millions of gamers to our ecosystem, as we execute on our ambition to reach more gamers on more platforms,” according to Nadella.

“With cloud gaming, we continue to innovate to offer players more ways to experience the games they love, where, when and how they want,” he told analysts. Hours streamed jumped 44% from the same quarter a year ago.

“Great content is key to our growth and, across our portfolio, I’ve never been more excited about our lineup of upcoming games,” Nadella said. He noted that, earlier in the month, Microsoft announced new first-party titles coming this year to  Xbox videogame consoles, PCs and Game Pass, Microsoft’s Xbox subscription service. Those new games include a new Indiana Jones title.

Microsoft also recently announced the planned launch of “significant updates this calendar year to many of our most durable franchises, which bring in millions of players each month,” Nadella said. Those franchises included Call of Duty and Elder Scrolls Online.

Microsoft game revenue grew 49% from Q2 last year and 48% in constant currency, with 44 points of net impact from the Activision acquisition, according to Amy Hood, Microsoft’s CFO. Total Game revenue was “in line with expectations as stronger-than-expected performance from Activision was offset by the weaker-than-expected console market,” she said. Content and services revenue jumped 61% from a year ago and 60% in constant currency, “driven by 55 points of net impact from the Activision acquisition,” she said. Xbox hardware revenue grew 3% and 1% in constant currency.

In games, Microsoft expects to report revenue growth “in the low 40s, including approximately 45 points of net impact from the Activision acquisition,” she went on to say. “We expect Xbox content and services revenue growth in the low to mid-50s, driven by approximately 50 points of net impact from the Activision acquisition. Hardware revenue will decline year over year.

Also during the call, Nadella said that, “in 2024, AI will become a first-class part of every PC.” He told analysts: “Windows PCs with built-in neural processing units were front and center at CES, unlocking new AI experiences to make what you do on your PC easier and faster—from searching for answers and summarizing e-mails, to optimizing performance and battery efficiency.”

Highlighting “examples of our momentum and progress” in Q2, Nadella said: “Azure again took share this quarter, with our AI advantage. Azure offers the top performance for AI training and inference and the most diverse selection of AI accelerators, including the latest from AMD and NVIDIA, as well as our own first-party silicon, Azure Maia.”

Microsoft now has 53,000 Azure AI customers, he pointed out. “Over one-third are new to Azure over the past 12 months,” he said.

Microsoft overall had a record quarter that Nadella said was
“driven by the continued strength” of the Microsoft Cloud, which surpassed $33 billion in revenue, up 24%, from the same quarter a year ago.

Total Microsoft revenue grew 18% to $62 billion, while net income jumped 33% to $21.9 billion.