Microsoft Preview : What to expect of Q3 Earnings?

Microsoft is one of the pillars of the global digital economy and a brand that permeates almost every aspect of software. The company's financial results often become a barometer of demand for technology and investments in data infrastructure and artificial intelligence. Today, after the stock market closes in the United States, the company will present its report for the last quarter. Not only the results table itself will matter, but also the interpretation of trends in individual business lines and guidance for the coming months.

• The market expects revenues of around $75.5 billion, which would mean a year-over-year growth of approximately 14% and an EPS of $3.66.

Beyond hitting these values, it will be important how the company describes the condition of its main segments and whether it confirms the sustainability of demand for cloud services and AI-based solutions. Investors will compare the dynamics of revenues and margins over the last quarters to assess whether the current growth rate is sustainable.

Cloud

Cloud operations will be at the center of attention. The Intelligent Cloud segment currently accounts for about 40% of the company's revenues. Market expectations assume that Microsoft's cloud revenues will grow by over 20% year-over-year to around $46 billion. The dynamics of the Azure platform, which reflects the migration to the cloud, will be particularly closely monitored. Important indicators may also include server service usage rates, customer base, and the relationship between growth and the costs of expanding data centers.

Copilot

The second star of the evening will be Copilot, a set of AI-assisted features in office products. Investors are counting on maintaining a high growth rate of users and, more importantly, a clear increase in monetization.
Key data will include conversion rates from trials to paid plans, revenue per user, and the expansion of Copilot's availability in subsequent layers of the ecosystem, from office suites to software development tools and customer contact solutions.

Expectations

Beyond the numbers themselves, the tone of communication and forecasts matter. Microsoft is among the leaders in investment spending on computing and storage infrastructure, and the market expects clear evidence that these expenditures will translate into sustainable cash flow growth.

Valuations remain high, so the margin for error is small. Market participants may expect an increase in profit guidance for the coming quarters. Too conservative signals or cautious commentary from management could cool sentiments.
An important thread will be references to competition, with particular emphasis on cloud services. A positive surprise, however, could be the announcement of new cooperation with a company deeply involved in AI development, which would strengthen the message about the advantages of the Microsoft "ecosystem," reinforcing expectations for further expansion in cloud and AI-assisted services.

MSFT.US (D1)

Source: xStation5