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Key Takeaways
- Microsoft is set to report fiscal first-quarter earnings results after markets close Wednesday.
- Analysts expect the tech giant to post revenue and earnings growth from the year-ago period.
- Investors will likely be watching growth in the company's Azure cloud computing platform.
Microsoft (MSFT) is set to report fiscal first-quarter earnings results after markets close Wednesday, with investors likely to be watching growth in the company's Azure cloud computing platform.
Analysts expect revenue to jump 14% year-over-year to $64.65 billion. Net income is projected to land at $23.2 billion or $3.11 per share, up from $22.29 billion or $2.99 per share a year earlier.
| Analyst Estimates for Q1 2025 | Q4 2024 | Q1 2024 | |
| Revenue | $64.65 billion | $64.73 billion | $56.52 billion |
| Earnings Per Share | $3.11 | $2.95 | $2.99 |
| Net Income | $23.2 billion | $22.04 billion | $22.29 billion |
Key Metric: Cloud Growth
In the prior quarter, Microsoft reported cloud revenue of $36.8 billion, up 21% year-over-year, but short of the $37.2 billion analysts expected. Microsoft's Intelligent Cloud segment, which houses Azure, accounted for $28.5 billion in revenue, driven by a 29% jump in revenue from Azure and other services.
Deutsche Bank analysts said they expect Azure to post a percentage in the low-to-mid 30s for the fiscal first quarter, adding Microsoft “needs to deliver Azure outperformance and guidance for little if any deceleration” in order to satisfy investors' lofty expectations.
Business Spotlight: Artificial Intelligence Spending
Microsoft told investors when it reported earnings in July that it would raise its investment in artificial intelligence (AI) infrastructure in order to meet AI demand. Worries about whether Microsoft's higher spending will pay off weighed on the company's stock price in the wake of the report.
Goldman Sachs analysts said they view Microsoft's buildout as a "necessary investment ahead of the structural shift to Gen-AI, which is likely to present a vast revenue opportunity across all layers of the AI technology stack."
Microsoft announced several new AI-related features and initiatives in recent weeks, including upgrades to its Copilot AI assistant and autonomous AI agents for Copilot.
Shares of Microsoft have gained close to 14% since the start of the year, at $428.15 as of Friday's close.
Read the original article on Investopedia.