Microsoft to Report Fiscal Q4 Earnings as Wall Street Analyzes AI Revenue, Spending

Microsoft (MSFT) will report its fiscal fourth-quarter earnings after the bell on Tuesday, as Wall Street continues to look for signs that the massive wave of AI investment among big tech companies is starting to bear fruit.

For the quarter, Microsoft is expected to report earnings per share of $2.94 on revenue of $64.5 billion, according to data compiled by Bloomberg. Microsoft reported earnings per share of $2.69 on revenue of $56.2 billion during the same period last year.

Cloud revenue is expected to reach $36.8 billion, with Intelligent Cloud revenue, which includes Azure, reaching $28.7 billion.

During the previous quarter, Microsoft announced that AI services contributed 7 percentage points of growth to revenue for Azure and other cloud services. This represents an increase from 6 percentage points in the second quarter and 3 percentage points in the first quarter. The company initially began reporting AI contributions in the fourth quarter of last year, saying AI added 1 percentage point of growth to Azure at that time.

Microsoft shares are up 13% year to date.

Microsoft’s report follows rival and Google parent Alphabet’s (GOOG, GOOGL) earnings announcement last week, during which the company said it is seeing an increase in cloud revenue, partially due to interest in AI products.

Still, Google hasn’t offered specific numbers on AI’s impact on its cloud business, leaving some analysts like UBS Global Research’s Stephen Ju to predict that the revenue benefits of the company’s AI spending may not occur until the end of the year. first half of 2025 at the earliest. .

“Our checks for Microsoft were robust this quarter again as we believe the tidal wave of AI with Redmond at the helm is accelerating the flow of cloud business to Azure with strong momentum for the rest of 2024/2025,” the Wedbush analyst wrote. , Dan Ives, in an investor note ahead of Microsoft’s announcement.

According to Karl Keirstead, an analyst at UBS Global Research, Microsoft has also been gaining more market share from Google and Amazon.

“In terms of share changes between AWS, Microsoft Azure and Google Cloud, the most consistent theme in this round of checks was the number of customers and partners citing Microsoft share gains resulting from its early leadership on the AI ​​front,” Keirstead wrote in a recent note about the three main cloud players.

“This has been a recurring theme in scans over the last 6 to 12 months and comments about Azure’s relative strength seemed consistent with previous scans,” he added.

In addition to how much Microsoft is making from AI, investors will want to know how much more the company plans to spend on the technology’s future. In the third quarter, Microsoft reported capital expenditures of $14 billion as it continues to build out its AI infrastructure.

The story continues

During Alphabet’s earnings call, CFO Ruth Porat said the company spent $13 billion on capital expenditures, up from $12 billion in the previous quarter, adding that the vast majority of that spending goes to AI.

Amazon (AMZN) is expected to report earnings on August 1.

Google shares are up 22% year to date, while Amazon shares are up 23%.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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