Microsoft’s UK business reported a profit surge last year after the group boosted its revenues to £8.4bn, up from £6.3bn the year prior.

The UK entity of the US tech giant cited extra demand for its cloud services as driving the 33% increase in turnover, financial filings show.

For the year ended 30 June 2023, Microsoft reported pre-tax profits of £652m, up from £229m in 2022.

A slight increase in administrative expenses and cost of sales brought the group’s total profit for the year to £508.3m after tax, a major increase from the loss of £11.6m in 2022.

The Companies House documents also revealed that Microsoft UK increased its headcount by almost 600 staff last year.

Recently, Microsoft has gone all in on artificial intelligence, with a significant focus on leveraging the UK market to grow its AI business.

This month, Microsoft announced its new AI hub in London, where it will work on “state-of-the-art” large language model tools.

Last November, the group pledged to invest £2.5bn in the UK’s AI infrastructure, focusing on data centres and GPUs.

Microsoft’s recently formed AI-specific entity is currently run by Mustafa Suleyman, who co-founded one of the UK’s biggest AI successes, DeepMind, which was acquired by Google 10 years ago.

It has not all been rosy for Microsoft in the UK, however, with multiple investigations launched by British regulators into the company’s practices.

Last year, the Competition and Markets Authority (CMA) significantly delayed Microsoft’s acquisition of video game firm Activision Blizzard, though the deal was ultimately approved.

The CMA has also expressed concern over Microsoft’s numerous AI partnerships with groups like OpenAI, the company behind ChatGPT.

The CMA announced last week it was seeking views on the competition concerns associated with, among other partnerships, Microsoft’s work with Mistral AI.