Microsoft is set to report its earnings for the first quarter of its 2025 fiscal year, with a focus on the company’s investments in artificial intelligence. Investors and analysts will be closely watching the results to gauge customer demand for AI tools, as Microsoft continues to expand its capacity for training and running massive AI models. The effectiveness of the company’s AI tools for businesses will also be scrutinized.
Analysts are expecting Microsoft to report revenue of $64.51 billion, a 14% increase from the previous year. Earnings per share are expected to be $3.08, compared to $2.99 per share in the same quarter last year. One key metric to watch is the contribution of AI to the growth in Microsoft Azure revenue, as AI contributed 9 percentage points to the overall 33% Azure growth in the previous fiscal year. The revenue from Microsoft’s Azure OpenAI service, which is powered by technology from the company’s key AI partner, will also be of interest.
Another important aspect to watch is the contribution of Microsoft 365 Copilot, which offers AI enhancements to productivity tools and business applications. Any new disclosure of revenue from this service would garner widespread attention. Additionally, investors will be keeping a close eye on the company’s capital expenditures, which reached a record $19 billion in the June 2024 quarter, mainly to support its long-term AI and cloud infrastructure. Microsoft CFO, Amy Hood, has indicated that capital expenses are expected to increase even further in the coming years.
Morgan Stanley equity analysts Keith Weiss and Josh Baer believe that Microsoft shares have underperformed in the past three months due to concerns about capital spending and the return on AI investments. However, they see this as an opportunity for shares to climb and are optimistic about the company’s future prospects. Bank of America Securities analysts Brad Sills and Carly Liu expect Microsoft’s results to meet or exceed their revenue estimate of $64.7 billion, driven by Azure growth acceleration in the second half of the fiscal year.
Overall, Microsoft’s earnings report will be closely watched for insights into customer demand for AI tools and the company’s investment in AI and cloud infrastructure. The results will provide valuable information on the company’s financial performance and outlook for the future. Stay tuned for full coverage of Microsoft earnings on Wednesday.
