- Microsoft’s earnings report on July 30 will cover the fiscal fourth quarter ending June 30, 2024.
- Revenue is projected at $64.36 billion, reflecting a 14.5% year-over-year increase.
- Expected earnings per share are $2.70, up slightly from $2.69 last year.
- The Azure cloud business is anticipated to grow by 30% to 31%.
- Capital expenditures reached a record $14 billion in the March quarter, focused on cloud and AI infrastructure.
- AI contributed 7 percentage points to the 31% growth in Azure and cloud services.
- Operating margins are expected to increase by more than 2 percentage points for the fiscal year.
- Windows business guidance includes 10% to 13% revenue growth, with projected revenue of $15.2 billion to $15.6 billion.
- Productivity and Business Processes forecast revenue growth of 9% to 11%, ranging from $19.9 billion to $20.2 billion.
- Intelligent Cloud is expected to see a 19% to 20% increase, with revenue projected between $28.4 billion and $28.7 billion.
Main AI News:
Microsoft’s upcoming earnings report, scheduled for Tuesday, July 30, is set to provide valuable insights into the company’s strategic positioning amid the surging demand for artificial intelligence and cloud services. Covering the fiscal fourth quarter ending June 30, 2024, this report is anticipated to reflect the company’s efforts to align with AI trends and cloud investment strategies.
Key metrics to watch include:
- Revenue Expectations: Analysts forecast a revenue of $64.36 billion, marking a 14.5% increase year-over-year, aligning with the higher end of Microsoft’s guidance.
- Earnings per Share: Projected earnings stand at $2.70 per share, a slight increase from $2.69 a year prior.
- Cloud Growth: Microsoft anticipates a 30% to 31% growth in its Azure cloud business for the quarter.
Investors will also scrutinize capital expenditures, which reached a record $14 billion in the previous March quarter. This spending is crucial for expanding and enhancing cloud infrastructure to support large-scale AI model training and operations. Recent years have seen a significant upward trend in these expenditures.
AI’s role in driving cloud business growth will be another focal point. In the previous quarter, AI contributed 7 percentage points to the 31% growth in Azure and other cloud services. Additionally, Microsoft is expected to manage operating expenses tightly, with minimal headcount increases, to preserve profit margins amidst rising investments in cloud and AI infrastructure.
Amy Hood, Microsoft’s CFO, indicated that the company anticipates a more than 2 percentage point increase in operating margins for the 2024 fiscal year, attributing this to stringent cost management and efficiency efforts across teams.
In the Windows segment, Microsoft, alongside PC manufacturers, launched AI-powered Copilot+ PCs in June, with the flagship Recall feature omitted due to privacy concerns. This late-quarter launch is not expected to significantly impact PC sales figures for the earnings report.
Guidance Highlights:
- More Personal Computing: Expected revenue growth of 10% to 13%, with a projected range of $15.2 billion to $15.6 billion. Windows OEM growth is anticipated to be in the low- to mid-single digits.
- Productivity and Business Processes: Forecasted revenue growth of 9% to 11%, translating to $19.9 billion to $20.2 billion.
- Intelligent Cloud: Expected to see the highest growth, with a 19% to 20% increase, reaching a revenue range of $28.4 billion to $28.7 billion.
Conclusion:
Microsoft’s earnings report will provide a clear picture of how effectively the company is leveraging AI and cloud investments to drive growth. The anticipated revenue and earnings figures indicate strong performance, particularly in cloud services where AI is becoming a significant growth driver. The focus on expanding capital expenditures for cloud infrastructure and maintaining tight control over operating expenses suggests Microsoft is strategically positioning itself to capitalize on the burgeoning AI market while optimizing profitability. Investors and analysts will closely watch how these factors impact the company’s overall financial health and market positioning, especially in light of increasing competition and technological advancements in the AI and cloud sectors.
