Investors will be looking for early signs of traction from Microsoft’s artificial intelligence investments Tuesday afternoon when the company reports results for its fiscal fourth quarter.
They’ll likely need to wait longer to see a significant financial payoff from the company’s biggest AI bets, such as Microsoft 365 Copilot, still available only as a preview for now. Microsoft’s pricing news for the product sent its shares soaring to a new record last week.
But with the company already incorporating AI into other products, including Bing, GitHub, and its Azure cloud platform, Wall Street will be watching Microsoft’s results to get a sense for the actual business demand for emerging forms of artificial intelligence.
Microsoft’s partnership with ChatGPT maker OpenAI, sealed with a multi-billion dollar investment in the San Francisco company, has helped to give the Redmond company an early edge in the emerging era of generative artificial intelligence.
Wall Street analysts expect Microsoft to report revenue of $55.47 billion, as reported by Yahoo Finance, up 7% from the same quarter a year ago. That’s in the middle of Microsoft’s prior guidance of $54.85 billion to $55.85 billion.
Analysts expect the company to report earnings of $2.55 per share, up 14% from a year ago.
Google parent Alphabet, another cloud and AI bellwether, will report its earnings Tuesday afternoon, as well. Amazon reports earnings next week, on Thursday, Aug. 3.
Apart from AI, another angle to watch in Microsoft’s earnings will be any comments from CEO Satya Nadella about the company’s revenue from security products. A high-profile U.S. government breach by a Chinese hacking group is raising new questions about the security of Microsoft products, and its revenue from security tools.
Nadella said in January that security revenue surpassed $20 billion annually (up from $15 billion a year earlier), which was about 10% of Microsoft’s $204 billion in revenue in the 2022 calendar year.
On another front, analysts are likely to press for details on the outlook for Microsoft’s $69 billion Activision-Blizzard acquisition. The company recently won a key court ruling and gave itself an extra three months of breathing room to complete the deal.
Check back with GeekWire for details on Tuesday afternoon.
