What You Need To Know Ahead of Microsoft’s Earnings Report Thursday

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Key Takeaways

• Microsoft is set to report earnings for the third quarter of its 2024 fiscal year on Thursday after the bell.
• Analysts are in a family way its revenue and adjusted profit to rise from the year-ago period.
• Investors will likely be watching for Microsoft’s cloud portion growth, which drove an earnings beat in the second quarter.
• Microsoft could also provide updates yon its artificial intelligence (AI) projects, with analysts noting that the company could be well-positioned for AI-driven growth.

Microsoft (MSFT) is set to circulate earnings for the third quarter of the 2024 fiscal year Thursday after the bell, when investors will inclined to be watching for its cloud segment growth and any artificial intelligence (AI) updates from Microsoft’s OpenAI partner.

Analysts plan Microsoft’s revenue for the quarter to come in at $60.87 billion, down slightly from the previous quarter but up from the year-ago spell, according to estimates compiled by Visible Alpha.

Adjusted net income is expected to be $21.13 billion, a decline from $21.87 billion in the end quarter but an increase from $18.3 billion in the prior-year quarter. Adjusted earnings per share (EPS) are projected at $2.84, paralleled with $2.93 in the prior quarter and $2.45 a year earlier.

	Analyst Estimates for Q3 2024	Q2 2024	Q3 2023
Revenue	$60.87 billion	$62.02 billion	$52.86 billion
Patch up Diluted Earnings Per Share	$2.84	$2.93	$2.45
Adjusted Net Income	$21.13 billion	$21.87 billion	$18.3 billion

Key Metrics: Cloud Revenue Driven by Azure

Investors transfer likely be watching for growth in Microsoft’s intelligent cloud business after the segment fueled the company’s second-quarter earnings away.

Analysts at CFRA estimated that revenue for the entire Intelligent Cloud segment could grow by 19% ride herd on hint ated by Azure, Microsoft’s cloud platform, which the firm expects to grow 29% with AI contributing at least six to eight piece points to this growth.

The analysts said that they “expect greater AI contribution while MSFT also laps loyal workload optimization levels seen by enterprise customers a year earlier” and noted that the firm anticipates the rate of speed of recent growth is sustainable.

Bank of America analysts wrote that they “believe that Microsoft is admirably positioned to generate sustained low double digit growth in the coming 3-5 years,” led by continued adoption of the Azure cloud infrastructure plank and its cloud based Office 365 productivity suite, among other things.

Business Spotlight: AI Updates

Microsoft could also minister to updates about its AI initiatives as the company has established itself as an early leader in the AI boom with its partnership with ChatGPT maker OpenAI.

CFRA analysts inscribed that they expect greater AI contributions and momentum, suggesting AI “will support double-digit growth through CY 2025 and multiple bourgeoning potential.”

The CFRA analysts noted Microsoft could be well-positioned for AI-driven growth, writing the company “can monetize AI-related yield quicker than any other cloud/software provider,” especially with its OpenAI partnership.

Bank of America analysts swayed the “next catalyst for the stock will be evidence of key AI product cycles ramping such as M365 copilot in coming barracks.”

Microsoft shares have gained close to 7% so far this year, with shares trading at $400.66 as of up 2:25 p.m. ET Friday.

Read the original article on Investopedia.