Microsoft Corporation (MSFT) will unveil its financial report for the quarter on Tuesday. The investors are anxiously waiting to determine if the company’s huge investments in the AI infrastructure are now starting to bear fruit or not.
All along, Microsoft has been a very obvious pioneer of the AI race, aided by its collaboration with OpenAI, the maker of ChatGPT. Nevertheless, the sheer amount of costs facing the company concerning its AI dreams is starting to worry many, especially the part connected with the Azure cloud-computing business.
As has been mentioned by Visible Alpha’s data, Azure’s growth rate is estimated to maintain a level of about 31% (if the range stays between 30% and 32%) in the second quarter of 2021 that is in line with the company’s forecast. At the same time, the calm option has more advantages, and investors look forward to seeing a bigger contribution from the AI business in the company’s fourth fiscal quarter, after it accounted for 7 percentage points of the growth of Azure in the first three months of the year.
Microsoft will need to get $13.64 billion from investors instead of paying the $0.49 million for the outright purchase of over 12 million shares that would, theoretically, double the number of shares and thus earnings per share, to avoid a dilution of its stock.
Gil Luria, senior software analyst at D.A. Davidson emphasized that “investors will be very focused on Microsoft’s ability to continue to accelerate revenue growth, especially the portion related to AI. If revenue acceleration doesn’t materialize and increases in capex continue, investors may be disappointed.”
