:max_bytes(150000):strip_icc()/GettyImages-2136340096-b02bb3c7ab6840368c8b727a9737245e.jpg "What You Need To Know Ahead of Microsoft’s Earnings Report Thursday")
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Key Takeaways
- Microsoft is set to report earnings for the third quarter of its 2024 fiscal year on Thursday after the bell.
- Analysts are expecting its revenue and adjusted profit to rise from the year-ago period.
- Investors will likely be watching for Microsoft’s cloud segment growth, which drove an earnings beat in the second quarter.
- Microsoft could also provide updates about its artificial intelligence (AI) projects, with analysts noting that the company could be well-positioned for AI-driven growth.
Microsoft (MSFT) is set to report earnings for the third quarter of the 2024 fiscal year Thursday after the bell, when investors will likely be watching for its cloud segment growth and any artificial intelligence (AI) updates from Microsoft’s OpenAI partner.
Analysts project Microsoft’s revenue for the quarter to come in at $60.87 billion, down slightly from the previous quarter but up from the year-ago period, according to estimates compiled by Visible Alpha.
Adjusted net income is expected to be $21.13 billion, a decline from $21.87 billion last quarter but an increase from $18.3 billion in the prior-year quarter. Adjusted earnings per share (EPS) are projected at $2.84, compared with $2.93 in the prior quarter and $2.45 a year earlier.
| Analyst Estimates for Q3 2024 | Q2 2024 | Q3 2023 | |
| Revenue | $60.87 billion | $62.02 billion | $52.86 billion |
| Adjusted Diluted Earnings Per Share | $2.84 | $2.93 | $2.45 |
| Adjusted Net Income | $21.13 billion | $21.87 billion | $18.3 billion |
Key Metrics: Cloud Revenue Driven by Azure
Investors will likely be watching for growth in Microsoft’s intelligent cloud business after the segment fueled the company’s second-quarter earnings beat.
Analysts at CFRA estimated that revenue for the entire Intelligent Cloud segment could grow by 19% driven by Azure, Microsoft’s cloud platform, which the firm expects to grow 29% with AI contributing at least six to eight percentage points to this growth.
The analysts said that they “expect greater AI contribution while MSFT also laps greater workload optimization levels seen by enterprise customers a year earlier” and noted that the firm anticipates the pace of recent growth is sustainable.
Bank of America analysts wrote that they “believe that Microsoft is well positioned to generate sustained low double digit growth in the coming 3-5 years,” led by continued adoption of the Azure cloud infrastructure platform and its cloud based Office 365 productivity suite, among other things.
Business Spotlight: AI Updates
Microsoft could also provide updates about its AI initiatives as the company has established itself as an early leader in the AI boom with its partnership with ChatGPT maker OpenAI.
CFRA analysts wrote that they expect greater AI contributions and momentum, suggesting AI “will support double-digit growth through CY 2025 and multiple expansion potential.”
The CFRA analysts noted Microsoft could be well-positioned for AI-driven growth, writing the company “can monetize AI-related revenue quicker than any other cloud/software provider,” especially with its OpenAI partnership.
Bank of America analysts said the “next catalyst for the stock will be evidence of key AI product cycles ramping such as M365 copilot in coming quarters.”
Microsoft shares have gained close to 7% so far this year, with shares trading at $400.66 as of about 2:25 p.m. ET Friday.