#CanMicrosoftDeliverOnAI
Can Microsoft’s AI growth still justify its spending spree?
Microsoft’s results will be another key test of whether the AI boom is still generating enough growth to meet investors’ lofty expectations.
Microsoft will report its results on Wednesday, October 28, and once again, this will be one of those occasions when the numbers themselves may not be the biggest news.
Analysts expect revenue of around $90.6 billion, up nearly 17% from a year earlier, along with EPS of $4.71. Those are solid growth figures, especially considering how large Microsoft already is.
Microsoft is already spending an extraordinary amount of money to build its AI infrastructure. The company’s capital expenditures, including finance leases, reached approximately $41 billion in the previous quarter, and management expects that figure to exceed $50 billion this quarter. Just think about that for a moment. We’re talking about more than $50 billion in spending in just three months.
Of course, Microsoft has good reasons to invest so aggressively. Azure revenue grew 43% year over year in the previous quarter, and management projects growth of approximately 45% in constant currency this quarter. Moreover, the underlying picture suggests that demand remains strong enough that available computing capacity is still struggling to keep up. As such, I don’t think anyone is seriously questioning whether businesses want more AI computing power. The demand is clearly there.
$MSFTB
$NVDAB
$BNB
Can Microsoft’s AI growth still justify its spending spree?
Microsoft’s results will be another key test of whether the AI boom is still generating enough growth to meet investors’ lofty expectations.
Microsoft will report its results on Wednesday, October 28, and once again, this will be one of those occasions when the numbers themselves may not be the biggest news.
Analysts expect revenue of around $90.6 billion, up nearly 17% from a year earlier, along with EPS of $4.71. Those are solid growth figures, especially considering how large Microsoft already is.
Microsoft is already spending an extraordinary amount of money to build its AI infrastructure. The company’s capital expenditures, including finance leases, reached approximately $41 billion in the previous quarter, and management expects that figure to exceed $50 billion this quarter. Just think about that for a moment. We’re talking about more than $50 billion in spending in just three months.
Of course, Microsoft has good reasons to invest so aggressively. Azure revenue grew 43% year over year in the previous quarter, and management projects growth of approximately 45% in constant currency this quarter. Moreover, the underlying picture suggests that demand remains strong enough that available computing capacity is still struggling to keep up. As such, I don’t think anyone is seriously questioning whether businesses want more AI computing power. The demand is clearly there.
$MSFTB
$NVDAB
$BNB
