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For the fiscal first quarter, the company expects Intelligent Cloud revenues (Azure falls under the segment) in constant currency (cc) to increase between 14% and 15% to $23.3-$23.6 billion.
Microsoft suggested that revenue growth from Azure, the cloud computing platform that has become one of the main engines of its business, can have quarterly variability, primarily from per-user business and in-period revenue recognition, depending on the mix of contracts.
Our model estimate for Intelligent Cloud revenues is currently pegged at $23.3 billion, indicating 15% growth from the figure reported in the year-ago quarter.
Continued Growth in Azure to Drive Its Top Line
Microsoft’s cloud service has been benefiting from continued demand for cloud infrastructure monitoring, web-based application performance management and human capital management solutions, fueled by the increasing migration of workloads to the cloud.
In Azure, Microsoft expects revenue growth to be 25-26% in cc, including roughly 2 points from all Azure AI services.
In the fiscal fourth quarter, Azure revenues grew 26% year over year (up 27% in cc). Growth continues to be driven by Azure consumption-based business, and the company expects the trends from fiscal Q4 to continue into fiscal Q1. Microsoft’s per-user business should continue to benefit from momentum in the Microsoft 365 suite.
This Zacks Rank #3 (Hold) company is also seeing increasing momentum with Azure Arc, which now has 18,000 customers, up 150% year over year, including Carnival Corp., Domino’s and Thermo Fisher. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Azure’s increased availability in more than 60 announced regions globally is expected to have strengthened Microsoft’s competitive position in the cloud computing market, dominated by Amazon’s (AMZN - Free Report) Amazon Web Services and Alphabet’s (GOOGL - Free Report) Google Cloud.
In the last reported quarter, AWS revenues (17% of sales) rose 12% year over year to $22.1 billion. Operating income for AWS was $5.4 billion, down 6.1% year over year. The expansion of its AWS portfolio has been helping Amazon maintain its dominance in the cloud domain by gaining more customers.
Alphabet’s Google Cloud revenues rose 28% year over year to $8.03 billion, accounting for 10.8% of the quarter’s total revenues. Google Cloud reported operating income of $395 million compared with a loss of $590 million in the year-ago quarter.
Microsoft Leads Generative AI Race With Azure AI
Azure AI is helping organizations transform, bringing intelligence and insights to the hands of their employees and customers to solve their most pressing challenges. As OpenAI’s exclusive cloud provider, Azure powers all of OpenAI's workloads.
The launch of enterprise capabilities of Azure OpenAI and Copilots across Microsoft 365, Dynamics 365 and Power Platform is expected to be a game changer.
Azure AI is ushering in new, born-in-the-cloud AI-first workloads, with the best selection of frontier and open models, including Meta’s announcement supporting Llama on Azure and Windows, as well as OpenAI in the to-be-reported quarter.
Microsoft is expected to have benefited from continued momentum across Azure OpenAI Service. More than 11,000 organizations across industries, including Ikea, Volvo Group, and Zurich Insurance, as well as digital natives like Flipkart, Humane, Kahoot, Miro and Typeface, use the service.
Mercedes-Benz is bringing ChatGPT via Azure OpenAI to more than 900,000 vehicles in the United States, making its in-car voice assistant more intuitive.
In the to-be-reported quarter, Moody's (MCO - Free Report) and Microsoft announced a new strategic partnership that combines the latter’s robust data and analytical capabilities and the power and scale of Microsoft Azure OpenAI Service. Snowflake is also expected to increase its Azure spending as it builds new integrations with Azure OpenAI.
Microsoft is also partnering broadly to scale this next generation of AI to more customers. Snowflake will increase its Azure spending by building new integrations with Azure OpenAI. KPMG has announced a multi-billion-dollar commitment to Microsoft’s cloud and AI services to transform professional services.
New Azure AI Studio is becoming the tool of choice for AI development in this new era, helping organizations ground, fine-tune, evaluate and deploy models, and do so responsibly.
Image: Bigstock
Azure Cloud Strength to Aid Microsoft's (MSFT) Q1 Earnings
Microsoft’s (MSFT - Free Report) first-quarter fiscal 2024 results, scheduled to be reported on Oct 24, are likely to be driven by the continued growth in its cloud platform, Azure.
For the fiscal first quarter, the company expects Intelligent Cloud revenues (Azure falls under the segment) in constant currency (cc) to increase between 14% and 15% to $23.3-$23.6 billion.
Microsoft suggested that revenue growth from Azure, the cloud computing platform that has become one of the main engines of its business, can have quarterly variability, primarily from per-user business and in-period revenue recognition, depending on the mix of contracts.
Our model estimate for Intelligent Cloud revenues is currently pegged at $23.3 billion, indicating 15% growth from the figure reported in the year-ago quarter.
Continued Growth in Azure to Drive Its Top Line
Microsoft’s cloud service has been benefiting from continued demand for cloud infrastructure monitoring, web-based application performance management and human capital management solutions, fueled by the increasing migration of workloads to the cloud.
Microsoft Corporation Revenue (TTM)
Microsoft Corporation revenue-ttm | Microsoft Corporation Quote
In Azure, Microsoft expects revenue growth to be 25-26% in cc, including roughly 2 points from all Azure AI services.
In the fiscal fourth quarter, Azure revenues grew 26% year over year (up 27% in cc). Growth continues to be driven by Azure consumption-based business, and the company expects the trends from fiscal Q4 to continue into fiscal Q1. Microsoft’s per-user business should continue to benefit from momentum in the Microsoft 365 suite.
This Zacks Rank #3 (Hold) company is also seeing increasing momentum with Azure Arc, which now has 18,000 customers, up 150% year over year, including Carnival Corp., Domino’s and Thermo Fisher. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Azure’s increased availability in more than 60 announced regions globally is expected to have strengthened Microsoft’s competitive position in the cloud computing market, dominated by Amazon’s (AMZN - Free Report) Amazon Web Services and Alphabet’s (GOOGL - Free Report) Google Cloud.
In the last reported quarter, AWS revenues (17% of sales) rose 12% year over year to $22.1 billion. Operating income for AWS was $5.4 billion, down 6.1% year over year. The expansion of its AWS portfolio has been helping Amazon maintain its dominance in the cloud domain by gaining more customers.
Alphabet’s Google Cloud revenues rose 28% year over year to $8.03 billion, accounting for 10.8% of the quarter’s total revenues. Google Cloud reported operating income of $395 million compared with a loss of $590 million in the year-ago quarter.
Microsoft Leads Generative AI Race With Azure AI
Azure AI is helping organizations transform, bringing intelligence and insights to the hands of their employees and customers to solve their most pressing challenges. As OpenAI’s exclusive cloud provider, Azure powers all of OpenAI's workloads.
The launch of enterprise capabilities of Azure OpenAI and Copilots across Microsoft 365, Dynamics 365 and Power Platform is expected to be a game changer.
Azure AI is ushering in new, born-in-the-cloud AI-first workloads, with the best selection of frontier and open models, including Meta’s announcement supporting Llama on Azure and Windows, as well as OpenAI in the to-be-reported quarter.
Microsoft is expected to have benefited from continued momentum across Azure OpenAI Service. More than 11,000 organizations across industries, including Ikea, Volvo Group, and Zurich Insurance, as well as digital natives like Flipkart, Humane, Kahoot, Miro and Typeface, use the service.
Mercedes-Benz is bringing ChatGPT via Azure OpenAI to more than 900,000 vehicles in the United States, making its in-car voice assistant more intuitive.
In the to-be-reported quarter, Moody's (MCO - Free Report) and Microsoft announced a new strategic partnership that combines the latter’s robust data and analytical capabilities and the power and scale of Microsoft Azure OpenAI Service. Snowflake is also expected to increase its Azure spending as it builds new integrations with Azure OpenAI.
Microsoft is also partnering broadly to scale this next generation of AI to more customers. Snowflake will increase its Azure spending by building new integrations with Azure OpenAI. KPMG has announced a multi-billion-dollar commitment to Microsoft’s cloud and AI services to transform professional services.
New Azure AI Studio is becoming the tool of choice for AI development in this new era, helping organizations ground, fine-tune, evaluate and deploy models, and do so responsibly.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.