Microsoft Earnings Could Fall Flat on Slower Cloud Growth
Microsoft (MSFT), America's second most valuable company, may say cloud growth fell to its slowest rate in five years in the most recent quarter, the grim economy's counterpoint to Big Tech's flashy new products.
The Redmond, Washington-based company is expected to report earnings of $16.7 billion, or $2.24 cents a share, effectively unchanged from the prior-year quarter, according to estimates compiled by Visible Alpha. Revenue is expected to increase 3% year-over-year to $51.1 billion. The company will report financial results for the third quarter of its 2023 fiscal year after markets close Tuesday, April 25.
Investors will focus on the Intelligent Cloud segment, which has been Microsoft's largest in each of the last eight quarters. Cloud revenue is expected to grow at its slowest rate in five years, increasing 15% to $21.9 billion. Global spending on cloud services is projected to hit a record $592 billion in 2023, a 21% increase from last year, according to research firm Gartner.
Nonetheless, Microsoft's cloud business could be a bright spot as the company is projected to post a double-digit revenue decline in its Personal Computing segment, which consists of Windows products and devices like the Surface tablet and Xbox gaming console.
Microsoft CEO Satya Nadella is expected to face questions about the future of Microsoft's AI tools and the impact of cost-cutting measures. Nadella is likely to base much of the company’s outlook on the push to AI.
“The next major wave of computing is being born, as the Microsoft Cloud turns the world’s most advanced AI models into a new computing platform,” he said in last quarter's earnings releases.
Microsoft extended its partnership with ChatGPT creator OpenAI in January,
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