Microsoft faces Azure growth test

Microsoft reports fiscal third-quarter results after the bell on Wednesday, April 29, with Azure growth set to dominate the release. (microsoft.com) (finance.yahoo.com) Wall Street expects about $81.3 billion to $81.4 billion in revenue and roughly $4.06 to $4.07 in earnings per share for the quarter ended March 31. (finance.yahoo.com) (computing.net)) The number investors keep circling is Azure. Microsoft said Azure and other cloud services grew 39% in the December quarter, after 40% growth in the prior quarter and 33% growth a year earlier. (microsoft.com) (finance.yahoo.com) (microsoft.com) That matters because Microsoft has been spending heavily to build the computing capacity behind artificial intelligence products. In the January earnings call, the company said Microsoft Cloud revenue hit $51.5 billion and capital spending reached $37.5 billion. (finance.yahoo.com) (microsoft.com) Microsoft has also told investors that demand has been bumping into supply. Amy Hood said in January that Azure growth got help from efficiency gains that let Microsoft redirect capacity into revenue during the quarter. (microsoft.com) Analysts are now looking for proof that new capacity is turning into durable sales, not just one quarter of catch-up. Bank of America said the focus includes Azure growth as more AI capacity comes online, Copilot monetization, and whether older software businesses keep funding the buildout. (finance.yahoo.com) Another pressure point is OpenAI. Yahoo Finance reported that Microsoft’s revised relationship keeps it as OpenAI’s primary cloud provider but ends exclusive access to OpenAI models and revenue-sharing payments. (finance.yahoo.com) The market reaction has raised the stakes for this report. Microsoft shares closed at $429.25 on April 28, and Yahoo Finance data shows the stock is down about 13% year to date and more than 20% over six months. (finance.yahoo.com 1) (finance.yahoo.com 2) If Azure holds near the recent 39% pace and margins stay stable, Microsoft can argue the AI buildout is converting into cloud revenue. If growth slips, the questions on the earnings call are likely to shift from demand to returns on all that infrastructure spending. (microsoft.com) (finance.yahoo.com)