Microsoft is heading into its earnings report facing what one analyst calls a “prove it” moment, with investors looking for signs that its massive AI bet is sparking sustained cloud growth.
The tech giant will report fiscal second-quarter results after the market close on Wednesday, Jan. 28, covering the three months ended Dec. 31. Analysts expect revenue of $80.3 billion, up 15% from a year ago, and earnings per share of $3.85, up 19% from $3.23 a year earlier.
Microsoft has been spending big to keep up in the AI infrastructure race against Amazon, Google, and others. Its capital expenditures hit a record $34.9 billion in the fiscal first quarter alone, up from $24.2 billion in the prior quarter, as it moves quickly to build out data centers.
That ratchets up the pressure on Azure, Microsoft’s cloud platform and the engine driving its growth. Investors will be watching closely to see if it can hit the roughly 37% growth rate (in constant currency) that CFO Amy Hood projected on the company’s October earnings call.
That would be down from the 39% constant-currency growth Azure posted in the prior quarter (40% without adjusting for currency fluctuations). Analysts and investors will be asking whether a slower growth rate reflects temporary capacity constraints or something more concerning.
Wedbush analyst Dan Ives called this week a “prove it” moment for CEO Satya Nadella and team, noting that “doubters are building” in the stock even as his checks with Microsoft partners remain “incrementally strong” around Copilot and Azure deployments.
Outside the cloud, the picture is more mixed. Microsoft ended support for Windows 10 in October, pushing users toward Windows 11 or paid extended support. The transition creates revenue opportunities but has also generated customer friction amid reported update issues.
Meanwhile, some analysts say demand has softened in the PC and small-business segments.
But when it comes to AI adoption, Microsoft is touting continued signs of traction. At Barclays’ tech conference last month, Microsoft Commercial CEO Judson Althoff called Microsoft 365 Copilot “the fastest growing product we’ve ever launched with the highest utilization.”
Althoff also offered a window into how quickly AI agents are proliferating inside large organizations. Microsoft turned on its new Agent 365 management tool internally before announcing it at its Ignite conference, he said, and discovered 138,000 agents being used by 88,000 employees on a weekly basis.
“I would be willing to bet you have more AI happening inside your organizations than you know about,” Althoff told the audience.
Read the full article here
