Investing.com - Microsoft Corporation (NASDAQ:MSFT) is set to release its Q2 earnings report for 2024 on the afternoon of July 30th, providing crucial insights into the company’s performance and how its ventures in artificial intelligence (AI) are shaping its business.
Analysts and investors are eagerly anticipating these updates, especially given the turbulent earnings season for tech companies so far.
Microsoft revenues are expected to come in at $64.36 billion for Q2, reflecting a 14.5% year-over-year increase and aligning with the higher end of the company’s previous guidance. Earnings per share are predicted to be $2.70, slightly up from $2.69 a year ago. Microsoft had earlier forecasted 30% to 31% growth in its Azure cloud business for this quarter.
⚠️Track your favourite companies with InvestingPro! use coupon code INVPRODEAL and save over 50%!⚠️
Capital expenditures, which hit a record $14 billion in the March quarter of this year, are expected to remain high as Microsoft continues to expand and upgrade its cloud data centers for AI model training and operations.
AI's contribution to the growth in Microsoft’s cloud sector will be closely watched; AI accounted for 7 points of the 31% growth in Azure and other cloud services last quarter.
Microsoft aims to manage operating expenses tightly, minimizing headcount growth to maintain profit margins despite increased spending on cloud and AI infrastructure.
CFO Amy Hood indicated during the previous earnings call that the company expects operating margins to improve by over 2 points for the 2024 fiscal year, highlighting efforts to drive efficiencies and disciplined cost management while continuing to expand cloud and AI investments.
In the Windows segment, the recent launch of AI-powered Copilot+ PCs in June, albeit without the Recall feature due to privacy concerns, had minimal impact on PC sales for this quarter.
Microsoft had forecasted a 10% to 13% revenue growth in its More Personal Computing division, resulting in expected revenues between $15.2 billion and $15.6 billion, with Windows OEM growth in the low to mid-single digits.
For other parts of its business, Microsoft projected a 9% to 11% revenue increase for the June quarter in the Productivity and Business Processes division, including Office products, resulting in anticipated revenues between $19.9 billion and $20.2 billion.
The Intelligent Cloud division is expected to see the highest revenue growth, up 19% to 20%, translating to revenues between $28.4 billion and $28.7 billion.
Investors will also be listening for any comments from CEO Satya Nadella on recent issues, such as the high-profile CrowdStrike outage that impacted Windows PCs used by critical sectors like airlines and hospitals.