Microsoft Stock In Focus As Wall Street Roots For Q1 Beat On Cloud Strength, Retail Remains Bullish

Microsoft Corp. ($MSFT), along with Meta Platforms, Inc. ($META) are the “Magnificent 7” earnings that are on tap on Wednesday. Expectations are riding high, given the software giant’s artificial intelligence prowess.

Q3 Expectations

Wall Street analysts expect Microsoft to report fiscal year 2025 first-quarter earnings per share (EPS) of $3.10 and revenue of $64.57 billion. This compares to the year-ago EPS of $2.73 and revenue of $49.66 billion. 

Wedbush Securities’ Daniel Ives said he expects Microsoft to report a solid quarter, citing channel checks. He called for a modest beat on both metrics, with Intelligent Cloud likely driving the upside.

On Cloud Nine

Wall Street is modeling Intelligence Cloud revenue of $24.04 billion and the company guided it between $23.80 billion to $24.10 billion, the analyst noted. He expects AI monetization trends to accelerate overall cloud workloads for Microsoft over the next few quarters

The most important metric, the analyst said, is Azure public cloud revenue growth, with Wall Street estimating 33% YoY growth. This is beatable, given the high level of deal activity seen this quarter from core Microsoft enterprise customers and partners in the field, he added.

Alphabet, Inc’s ($GOOGL) ($GOOG) rival cloud computing platform - the Google Cloud Platform reported better-than-expected September quarter revenue and operating profit growth of 35% and 631%, respectively, to $11.35 billion and $1.95 billion.

Outlook

Ives pointed to accelerating cloud deal flow for Azure, with strong momentum going into 2025 and beyond. 

For the fiscal year, analysts, on average, estimate EPS of $13.18 and revenue of $279.13 billion, up from $11.8 and $245.12 billion, respectively, reported for fiscal year 2024.

Retail Bullish

On Stocktwits, retail sentiment continued to trend in the ‘bullish’ territory (63/100); however, it marked a deterioration from an “extremely bullish” stance seen a month ago. Retail chatter has picked up pace from “normal” a day ago to “high.”

The Stock

Microsoft shares have gained 15.55% for the year-to-date period and the company was recently toppled by Nvidia Corp. ($NVDA) as the world’s second most-valued corporation. 

In premarket trading, as of 9:16 am ET, Microsoft stock climbed 1.94% to $440.35.

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