Microsoft Eyes $90.69 Billion Quarter Amid AI Spending Surge

Microsoft prepares to announce quarterly results after the market close on Wednesday, with analysts projecting adjusted earnings of $4.73 per share and total revenue of $90.69 billion.

The company will report under two operating segments for the first time since 1998, a shift from the three-segment structure it used for the past 11 years. Analysts polled by StreetAccount expect Azure cloud revenue to reach $32.32 billion, marking a growth rate exceeding 44%.

Microsoft aims to expand its artificial intelligence footprint through infrastructure upgrades and product enhancements while maintaining positive free cash flow. This approach contrasts with rivals Alphabet and Amazon, which reported negative free cash flow in their June quarters. Meta also disclosed last week that it turned free cash flow negative in its third quarter.

To balance its costly AI buildout with capital efficiency, Microsoft announced plans to cut 4,800 jobs during the fiscal first quarter ending Sept. 30. On Monday, the company added that it is offering buyouts to up to 60,000 employees.

Analysts estimate capital expenditures and finance leases for the quarter at $50.67 billion. The company also established a dedicated AI implementation unit and unveiled a Copilot AI super app featuring coding abilities during the period.

As of Tuesday's close, Microsoft shares had risen nearly 10% year to date, lagging the S&P 500 index, which gained about 13% over the same span. Executives will provide guidance and discuss results on a conference call beginning at 5:30 p.m. ET.