Microsoft (MSFT) will report its fiscal third-quarter earnings after the bell on Thursday as Wall Street continues to look for signs that the AI explosion is more than just hype. In the previous quarter, Microsoft said its AI capabilities contributed 6 percentage points to the company’s Azure revenue growth, up from 3% in the previous quarter, and analysts expect more.
Shares of Microsoft have risen more than 10% since the start of the year, trailing rivals such as Google parent Alphabet (GOOG, GOOGL) and Amazon (AMZN), which have gained 15% and 22%, respectively. Over the past 12 months, shares of Microsoft are up 32%, while Amazon is up 67% and Google is up 47%.
The three companies are battling it out to see who can offer the most comprehensive AI solutions to enterprise customers and customers, whether by investing heavily in third-party companies like OpenAI and Anthropic or by reorganizing their internal teams like Google.
Wall Street expects Microsoft to report earnings per share of $2.83 on revenue of $60.88 billion for the quarter, according to analyst estimates compiled by Bloomberg. During the same period last year, Microsoft reported earnings per share of $2.45 on revenue of $52.86 billion.
Analysts expect Microsoft to report total commercial cloud revenue of $33.93 billion for the quarter, up 19% year-over-year. In terms of business segments, Wall Street expects Microsoft to have $19.54 billion in Productivity and Business Process revenue, $26.25 billion in Intelligent Cloud revenue and $15.07 billion US dollars will be reported in the area of personal computing.
Microsoft’s AI ambitions got a major boost on Tuesday when it announced that Coca-Cola (KO) had signed a five-year, $1.1 billion deal to use the software giant’s Azure cloud services and AI technology.
“Through our long-term partnership, we have made significant progress in accelerating system-wide AI transformation at The Coca-Cola Company and its network of independent bottlers worldwide,” Judson Althoff, Microsoft executive vice president and chief commercial officer, said in a statement.
Microsoft has rolled out a flurry of new AI features and services across its enterprise and productivity apps and consumer platforms since launching its revamped version of Bing and its AI chatbot in February 2023.
In March, Microsoft announced that it had hired Mustafa Suleyman, co-founder of DeepMind AI and Inflection AI, Karén Simonyan, co-founder of Inflection AI, as well as a number of employees from the company. Suleyman is starting a new position at Microsoft as CEO of the Microsoft AI division.
In February, Microsoft announced a multi-year partnership with French AI startup Mistral that would allow Microsoft to offer the company’s models on its Azure platform.
Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.
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