On Tuesday, Microsoft stock declined before its Q4 earnings report, due later, as Wall Street focused on artificial intelligence (AI) investments and spending.
Although the cloud giant’s stock closed Monday’s session positively, it dipped by -0.04% to $426.00 per share in after-hours trading. Moreover, it continued to plummet by -0.18% to $425.96 apiece in the pre-market.
According to reports, Microsoft is anticipated to disclose earnings per share (EPS) of $2.94 per share on $64.50 billion in revenue. The data was higher than the 2023 reported EPS of $2.69 on $56.20 billion in earnings.
Furthermore, the firm’s cloud profit is set to reach $36.80 billion, with Intelligent Cloud revenue, which adds Azure, expected to hit $28.70 billion.
During the previous quarter, Microsoft reported that AI services had added 7.00% growth to its revenues from Azure and other cloud services. That was better than the 6.00% points in the second quarter and 3.00% in Q1.
Meanwhile, the cloud giant’s report comes after Alphabet released its earnings last week. The Google parent firm noted a rise in cloud revenue, partly driven by growing interest in AI products.
However, Google did not provide specific figures on how AI affects its cloud business. This led analysts to predict that the revenue benefits from the company’s AI investments might not be realized until the first half of 2025.
Azure Modest Growth Might Boost Microsoft’s Q4 Results
Analysts anticipated that Microsoft would show solid Azure cloud growth after collaborating with OpenAI.
Furthermore, experts noted that the AI surge, with Redmond leading the way, is boosting cloud deals for Azure, which shows solid momentum in the rest of 2024 and 2025. They also expect the firm to significantly outperform expectations for the June quarter.
Meanwhile, Morgan Stanley reported seeing solid demand heading into its fiscal Q4 results, partly due to a modest acceleration in its Azure cloud services.
Additionally, Microsoft has invested billions in OpenAI, giving it a significant advantage in AI adaptation. The company anticipates its capital expenditures will be boosted during the fourth quarter, driven by cloud and AI infrastructure investment.
