Microsoft (MSFT) gears up for Q1 earnings release. Here’s what to expect

Microsoft Corp. (NASDAQ: MSFT) had a strong finish to the last fiscal year, with its booming cloud business boosting revenue and earnings growth in the fourth quarter. Its growth strategy is currently focused on driving innovation across the product portfolio and generating long-term operating leverage through effective cost management.

The last closing price of MSFT almost matched its value more than eight months ago, with the stock mostly trading sideways during that period. It rose to an all-time high of $466.73 in early July but soon lost momentum and mostly underperformed the industry since then. In general, market watchers are bullish on the stock’s prospects – it is expected to breach the $500 mark in the coming months. The company’s continued leadership in the industry and consistent profitability add to the stock’s appeal as a good investment option.   

Estimates

The tech giant’s first-quarter 2025 earnings report is expected on Wednesday, October 30, at 4:10 pm ET. It is estimated that Q1 profit increased sharply to $3.09 per share from $2.73 per share last year. The positive outlook represents an estimated 30% jump in revenues to $64.48 billion. The company has a good track record of delivering better-than-expected numbers, with quarterly earnings beating the Street View consistently in the past two years.

“To meet the growing demand signal for our AI and cloud products, we will scale our infrastructure investments with FY ’25 capital expenditures expected to be higher than FY ’24. As a reminder, these expenditures are dependent on demand signals and the adoption of our services that will be managed through the year. As scaling these investments drives growth in COGS, we will remain disciplined in operating expense management. Therefore, we expect FY ’25 opex growth to be in the single digits,” Microsoft’s CFO Amy Hood said at the Q4 earnings call.

Strong Results

In the final three months of fiscal 2024, net income increased to $22.04 billion or $2.95 per share from $20.08 billion or $2.69 per share in the prior-year period and topped expectations. The growth was driven by a 15% jump in fourth-quarter revenues to $64.7 billion, which is slightly above analysts’ consensus forecast. Strong demand across the company’s cloud business contributed significantly to the top-line growth. Revenues of Azure, the company’s cloud computing and AI business segment, grew 29% but fell short of expectations, disappointing investors.

After retreating from the July peak, Microsoft’s shares picked up momentum in recent weeks and stayed above their 52-week average of $409.39. The stock traded lower for most of Thursday’s session.