Satya Nadella, Microsoft CEO, speaking on CNBC Squawk Boxa outside the World Economic Forum in Davos, Switzerland on January 2, 2025.
Gerry Miller | CNBC
Microsoft It is in the middle of the flourishing of artificial intelligence, but it’s been a while since investors have seen awards.
The price of the software giant shares has increased less than 8% last year. This is by far the weakest gain among eight American technological companies. Apple has the next smallest increase at 19%, followed by Alphabet to 26%. All others are at least 48%, and Tesla is the best performer in the group, which is 117%.
Microsoft is also badly monitored by technologically heavy Nasdaq, which has received 25%in the last year.
It is a background that goes to Microsoft’s quarterly earnings on Wednesday. The company begins a season of technological earnings, along with Target and Tesla. Apple follows on Thursday and the alphabet and Amazon Report next week.
The biggest question for Microsoft shareholders is surrounding Azure Cloud-Computing Business and whether to show accelerating growth.
In October Microsoft They told the investors This demand for Azure Services surpassed the supply due to the delay of third party services. Finance chief Amy Hood said she still predicts an increase in the growth rate of the azure in the first half of 2025, but for December, she called for growth of 31% to 32% in a constant currency, which would have previously fallen with 34% in Relationship to 34% period. Microsoft supplies slipped 6%the next day.
Since the last quarter of 2023, the growth of the azure has increased by 2 percentage points. Meanwhile, top rivals Amazon and alphabet have recorded cloud growth over these stretches accelerated by 7 points, or 13 points. This is of particular importance for investors, because Microsoft now has tens of billions of dollars in three -month capital expenditure to meet the needs of Cloud AI AI needs of customers.
Microsoft spokesman did not comment.
Microsoft operates in many other markets. However, investors gravitate to the cloud first, because it is a significant category that is still expanding quickly while companies continue to move away from owning and managing their own data centers and adding to Heftier working load.
Generally, Microsoft is expected to report a revenue growth of 11% compared to the year earlier to $ 68.8 billion, according to LSEG. This would mark the strongest growth compared to the year in any quarter of the mid -2023. Analysts expect that earnings per share will increase to $ 3.11 with $ 2.93 a year ago.
Investors were more lush on Microsoft 2023, sent shares more than 50%, the best year since 2009. The driving force was Microsoft’s intimate relationship with the Creator Openi Creator, which started the generative AI boom and led to a historical increase in investment.
Microsoft is an Openai’s leading support, after pouring Nearly $ 14 billion In starting AI. Through the partnership, Microsoft gets a lot of cloud business, but also spends strongly to the construction of infrastructure.
Relationship changed In an important way last week, when Microsoft said Openi would no longer use azure on an exclusive basis, except when it comes to handling inquiries from developers. Forward, opening will have to check with Microsoft when looking for more computer capacity, and Microsoft will be able to accept or refuse a request.
The announcement arrived at the same time as Introduction President Donald Trump from Stargatea, Infrastructure AI Infrastiac Including SoftBank, Open and Prophet.
In yourself blog blogOpenii called Microsoft a technological partner, but not a member of a group that will build and manage Stargate, which can introduce up to $ 500 billion in investment. Microsoft has committed Up to 80 billion dollars of capital expenditures associated with AI in the year ending on June 30. Nvidia graphic units for processing or GPU.
Cowen analysts wrote in a report that last week’s development could help Microsoft to respond to the Azure growth rate in the mid-30s. They said that Microsoft “funded the CPEX investments for the Openi Model, but not collecting revenue,” and that the company pushing part of that training, the company can “show improved Efficiency of Capex -a stronger yields on capital consumption”, retaining access to its opening approach .
Kevin Walkush, a portfolio manager at Jensen Investment Management, said he expects an AI investment to pay off in the long run.
“If Ai does not appear, there is still a long Cloud runway,” said Walkush, whose company had about $ 913 million in Microsoft’s shares in late September. “But I think the chance of Ai is really big, so it’s a bet I ready to let me use this opportunity.”
