What You Need to Know Before Microsoft’s Earnings Report

Key conclusions

Microsoft is scheduled to report its fiscal third-quarter 2024 earnings on Thursday after the market opens.
Analysts expect revenues and profits to increase compared to the same period last year.
Investors will likely be watching growth in Microsoft’s cloud services segment, which helped propel the company’s profits higher in the second quarter.
Microsoft may also provide updates on its artificial intelligence (AI) projects, with analysts noting that the company could be well-positioned for AI-driven developments.

Microsoft (MSFT) is set to report fiscal third-quarter 2024 earnings on Thursday after the close of trading. Investors will likely be watching for growth in the cloud computing segment and any artificial intelligence (AI) updates from Microsoft partner OpenAI.

Analysts are forecasting Microsoft’s revenue for the quarter will be $60.87 billion, down slightly from the prior quarter but up from the same period last year, according to estimates compiled by Visible Alpha.

Net income is expected to be $21.1 billion, down from $21.87 billion in the prior-year quarter but up from $18.3 billion in the prior-year quarter. Earnings per share (EPS) is forecast at $2.83, down from $2.93 in the prior-year quarter and $2.45 a year earlier.

	Analysts’ estimates for Q3 2024	Q2 2024	Q3 2023
Income	$60.87 billion	$62.02 billion	$52.86 billion
Diluted earnings per share	$2.83	$2.93	$2.45
Net income	$21.1 billion	$21.87 billion	$18.3 billion

Key Metrics: Cloud Revenue Generated by Azure

Investors will likely be watching Microsoft’s intelligent cloud business grow after the segment helped fuel the company’s stronger financial results in the second quarter.

Analysts at CFRA estimate that revenue for the entire intelligent cloud segment could grow 19%, with Azure, Microsoft’s cloud platform, forecast to grow 29%, with artificial intelligence contributing at least six to eight percentage points of that growth.

The analysts said they “expect to see greater AI adoption, and MSFT will also achieve the higher levels of workload optimization that enterprise customers saw a year earlier,” and noted that the company expects the pace of recent growth to be sustainable.

Bank of America analysts wrote that they “believe Microsoft is well-positioned to generate stable, low-double-digit growth over the next 3-5 years,” driven in part by continued adoption of its Azure cloud infrastructure platform and Office 365 cloud-based productivity suite.

Business Spotlight: AI Updates

Microsoft may also provide an update on its AI initiatives, as the company solidifies its position as a leader in AI development through a partnership with ChatGPT creator OpenAI.

CFRA analysts wrote that they expect AI to contribute more and be more dynamic, suggesting that AI “will support double-digit growth through calendar year 2025 and multiple expansion potential.”

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

Bank of America analysts said that “the next catalyst for the stock will be evidence that key AI product cycles like M365 copilot will continue to grow in coming quarters.”

Microsoft shares fell 4% to $392.44 as of 11:30 a.m. ET on Thursday ahead of the company’s earnings release, though they have risen about 4% since the start of 2024.

UPDATE – April 25, 2024: This article has been updated to reflect more recent, unadjusted analyst estimates and stock price information.