Microsoft is set to report its earnings for the first quarter of its 2025 fiscal year on Wednesday, Oct. 30. Investors and analysts will be closely watching the results to gauge customer demand for artificial intelligence, as the company continues to invest heavily in expanding its AI capacity. Microsoft’s financial performance is seen as a reflection of broader industry trends in AI adoption among big business customers. Key numbers to watch include revenue, which is expected to reach $64.51 billion, up 14% from a year ago, and earnings per share of $3.08, compared to $2.99 per share in the same quarter last year.
AI’s contribution to growth in Microsoft Azure revenue will also be a crucial metric to watch, as it played a significant role in the overall 33% growth of Azure in fiscal year 2024. This includes revenue from services like Microsoft’s Azure OpenAI, powered by technology from key AI partner. The revenue impact from Microsoft 365 Copilot, which offers AI enhancements to productivity tools and business applications, has not been disclosed, but any new information on this front would be of great interest. Another important aspect to keep an eye on is capital expenditures, as Microsoft reported a record $19 billion in capex in the June 2024 quarter alone, mainly for supporting its long-term AI and cloud infrastructure.
Morgan Stanley equity analysts have noted that Microsoft shares have underperformed compared to peers in the past three months, with concerns revolving around capital spending and the return on the company’s large AI investment. However, they see this as an opportunity for shares to potentially climb in the coming months. Bank of America Securities research analysts anticipate Microsoft’s revenue to meet or exceed their estimate of $64.7 billion, driven by Azure workload migration and upgrades in the Office premium E3/E5 enterprise licensing cycle. They also expect Azure growth to accelerate in the second half of the fiscal year, serving as a catalyst for Microsoft shares overall.
Overall, Microsoft’s earnings report this week will shed light on the company’s performance and its AI initiatives. With heavy investments in AI and cloud infrastructure, Microsoft is positioning itself as a key player in the AI space. The contribution of AI to Azure revenue, performance of AI-enhanced tools like Microsoft 365 Copilot, and capital expenditures for supporting AI and cloud initiatives will be closely monitored. Analysts are optimistic about Microsoft’s potential for growth, with expectations that the company’s results will meet or exceed estimates, potentially boosting shareholder confidence in the company’s long-term AI strategy. Stay tuned for comprehensive coverage of Microsoft’s earnings report on Wednesday.
