Microsoft Earnings: AI and Cloud Growth Expected
With a strong track record of innovation and investment in AI, Microsoft is well-positioned for continued growth and success in the tech industry, driven by its cloud and AI businesses, and its strategic partnerships and investments, including its stake in OpenAI.
Microsoft is set to report its Q4 earnings, with Wall Street expecting solid growth in its AI and cloud business, driven by increased adoption of AI use cases and significant investments in its AI buildout, totaling $85 billion.
The company's Intelligent Cloud segment revenue is expected to top out at $29.09 billion, with analysts predicting adjusted EPS of $3.37 on revenue of $73.89 billion. Microsoft attributed 16 percentage points of growth in its Azure business to AI sales in Q3, and expects 17.25 percentage points of growth in Q4. The company's AI-powered Copilot software could serve as a growth catalyst, and its early investments in OpenAI have made it an AI leader.
Despite solid growth, analysts believe Microsoft's AI investments will truly take off in fiscal 2026. The company has been investing heavily in data center capacity to meet demand for AI models, with expected capital expenditures of $100.5 billion in fiscal 2026. Microsoft's shares have risen 22% in 2025, outperforming the S&P 500 index.
However, Microsoft is at odds with OpenAI over its plans to transform its for-profit arm into a public benefit corporation, which could impact Microsoft's equity in the new business. The company's Q4 earnings report, set to be released after markets close on Wednesday, will provide further insight into its AI and cloud growth, as well as its future plans and investments.