When Microsoft releases its earnings on Tuesday, investors will be left with one major question: has the company's Azure cloud computing business grown sufficiently to warrant spending billions of dollars on artificial intelligence infrastructure?
Thanks to its partnership with ChatGPT creator OpenAI, Microsoft is widely regarded as the leader in the race to profit from AI. Based on statistics from Visible Alpha, Microsoft is anticipated to disclose that Azure's growth remained consistent quarter-over-quarter at about 31% between April and June.
That would be consistent with the company's projection, but investors anticipate that the AI division would contribute more in the fourth quarter of the company's fiscal year after contributing seven percentage points to Azure's growth in the first three months of the year.
According to 16 experts surveyed by LSEG, Microsoft's capital investment probably increased by around 53% year over year to $13.64 billion over that time. a significant increase above the $10.95 billion in spending it reported for the prior quarter.
This month, worries that Wall Street may have grown too bullish about profits growth have plagued the U.S. stock market. These worries stem from concerns that tech firms' reckless spending on data centres would not pay off in the short term.
Alphabet, the parent company of Google, revealed quarterly capital spending that came in about $1 billion above budget last week, and while the revenue bump from AI integrations remained small, it caused a selloff in big tech businesses. As a result, shares of Alphabet plunged more than 5%.
Elon Musk posed a provocative question, and Alphabet said that its quarterly capital expenditures will remain high for the remainder of 2024—at or above $12 billion—in reference to the firm that tracks space trash.
"The capacity of Microsoft to sustainably increase revenue growth, particularly in the AI-related segment, will be of great interest to investors. Investors can be let down if revenue acceleration doesn't happen and capital expenditures keep going up, according to Gil Luria, senior software analyst at D.A. Davidson.
Microsoft has stated that in order to get over the capacity issues impeding its ability to take advantage of the demand for AI, it must invest in data centres immediately.
Its perspective is similar to that of Alphabet and other IT firms. Last week, Sundar Pichai, the CEO of Google parent company, stated that the "risk of under-investing (in AI infrastructure) is dramatically greater than the risk of over-investing."
By extending access to its AI cloud service and introducing new features like the 365 Copilot assistant for Word and Excel, Microsoft has been able to win over additional business from its major enterprise clientele thanks to the increase in expenditure.
According to Microsoft, half of the Fortune 500 firms utilise the $30/month Copilot service, which condenses voluminous communications into a few bullet points or quickly completes lines of computer code.
Though the Redmond, Washington-based tech giant has not yet revealed the service's financial contribution, experts predict that Copilot's influence will become more noticeable in the second half of 2024.
"Generic AI has the potential to be a bigger opportunity for enterprise, and Microsoft is incredibly well-positioned to capitalise on their install base, even though a lot of attention has been on consumer-facing apps like ChatGPT," Igor Tishin, an analyst at Harding Loevner, a $55 billion asset manager with Alphabet and Microsoft among its largest holdings, said.
This year, Microsoft's market worth has increased by more than $350 billion thanks to a 13% increase in its shares.
Although the stock reached a record high on July 5, the current tech selloff has caused an almost 9% decline. Compared to the S&P 500's 14.5% increase this year, it has underperformed.
Booming generative AI increases the market worth of IT companies Booming generative AI increases the market worth of IT companies
Booming generative AI increases the market worth of IT companies Booming generative AI increases the market worth of IT companies
After growing by 17% in the previous quarter, the corporation is predicted to report a 14.6% gain in overall revenue for the April–June period.
This is mostly due to its personal computer sector, which includes Windows and the Xbox game division, growing more slowly.
The productivity industry, which is home to 365 Copilot, LinkedIn, and the Office software suite, is predicted to increase by around 10%.
(Source:www.theprint.in)
Thanks to its partnership with ChatGPT creator OpenAI, Microsoft is widely regarded as the leader in the race to profit from AI. Based on statistics from Visible Alpha, Microsoft is anticipated to disclose that Azure's growth remained consistent quarter-over-quarter at about 31% between April and June.
That would be consistent with the company's projection, but investors anticipate that the AI division would contribute more in the fourth quarter of the company's fiscal year after contributing seven percentage points to Azure's growth in the first three months of the year.
According to 16 experts surveyed by LSEG, Microsoft's capital investment probably increased by around 53% year over year to $13.64 billion over that time. a significant increase above the $10.95 billion in spending it reported for the prior quarter.
This month, worries that Wall Street may have grown too bullish about profits growth have plagued the U.S. stock market. These worries stem from concerns that tech firms' reckless spending on data centres would not pay off in the short term.
Alphabet, the parent company of Google, revealed quarterly capital spending that came in about $1 billion above budget last week, and while the revenue bump from AI integrations remained small, it caused a selloff in big tech businesses. As a result, shares of Alphabet plunged more than 5%.
Elon Musk posed a provocative question, and Alphabet said that its quarterly capital expenditures will remain high for the remainder of 2024—at or above $12 billion—in reference to the firm that tracks space trash.
"The capacity of Microsoft to sustainably increase revenue growth, particularly in the AI-related segment, will be of great interest to investors. Investors can be let down if revenue acceleration doesn't happen and capital expenditures keep going up, according to Gil Luria, senior software analyst at D.A. Davidson.
Microsoft has stated that in order to get over the capacity issues impeding its ability to take advantage of the demand for AI, it must invest in data centres immediately.
Its perspective is similar to that of Alphabet and other IT firms. Last week, Sundar Pichai, the CEO of Google parent company, stated that the "risk of under-investing (in AI infrastructure) is dramatically greater than the risk of over-investing."
By extending access to its AI cloud service and introducing new features like the 365 Copilot assistant for Word and Excel, Microsoft has been able to win over additional business from its major enterprise clientele thanks to the increase in expenditure.
According to Microsoft, half of the Fortune 500 firms utilise the $30/month Copilot service, which condenses voluminous communications into a few bullet points or quickly completes lines of computer code.
Though the Redmond, Washington-based tech giant has not yet revealed the service's financial contribution, experts predict that Copilot's influence will become more noticeable in the second half of 2024.
"Generic AI has the potential to be a bigger opportunity for enterprise, and Microsoft is incredibly well-positioned to capitalise on their install base, even though a lot of attention has been on consumer-facing apps like ChatGPT," Igor Tishin, an analyst at Harding Loevner, a $55 billion asset manager with Alphabet and Microsoft among its largest holdings, said.
This year, Microsoft's market worth has increased by more than $350 billion thanks to a 13% increase in its shares.
Although the stock reached a record high on July 5, the current tech selloff has caused an almost 9% decline. Compared to the S&P 500's 14.5% increase this year, it has underperformed.
Booming generative AI increases the market worth of IT companies Booming generative AI increases the market worth of IT companies
Booming generative AI increases the market worth of IT companies Booming generative AI increases the market worth of IT companies
After growing by 17% in the previous quarter, the corporation is predicted to report a 14.6% gain in overall revenue for the April–June period.
This is mostly due to its personal computer sector, which includes Windows and the Xbox game division, growing more slowly.
The productivity industry, which is home to 365 Copilot, LinkedIn, and the Office software suite, is predicted to increase by around 10%.
(Source:www.theprint.in)