Microsoft is poised to report its fiscal fourth-quarter results on Wednesday, July 29, 2023, projecting revenues between $86.7 billion and $87.8 billion, reflecting a growth of 13% to 15%. The Zacks Consensus Estimate anticipates revenues at $87.44 billion, marking a 14.4% increase compared to the previous year, with earnings expected to reach $4.21 per share, showing a 15.3% year-over-year rise.
In light of recent performance data from Alphabet, which reported a 119.8 billion revenue for Q2 driven by 82% growth in its cloud segment, market focus is on Microsoft’s Azure growth. Currently, Azure and cloud services are expected to grow at 40% in constant currency, with Microsoft Cloud revenue anticipated to reach $54.5 billion—an increase of 29%. However, analysts remain cautious due to rising capital expenditures projected to exceed $40 billion for the quarter, partially impacted by semiconductor shortages.
Despite a strong track record of beating consensus estimates over the past 15 quarters, Microsoft faces market skepticism regarding its high capital intensity and contracting free cash flow, which fell 22% year-over-year to $15.8 billion. Investors will closely monitor Azure growth rates and fiscal 2027 capex guidance to gauge market sentiment post-earnings release.
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