Will Cloud Results Boost Microsoft Earnings?

The 2025 Q2 earnings season picks up considerable steam this week, with a wide variety of S&P 500 companies reporting results. Headlining the docket are several Mag 7 members, a list that includes Microsoft MSFT.

A peer, Alphabet GOOGL, already revealed its quarterly results, whose Cloud performance was largely positive and pleased the market. Given Microsoft’s reliance on cloud performance, let’s take a closer look at what to expect from the fellow tech titan.

Alphabet Impresses

Alphabet’s results were largely positive, with Google Cloud revenue soaring 32% year-over-year to $13.6 billion. The growth rate reflected a nice acceleration, with operating income in the segment also more than doubling YoY. 

Below is a chart illustrating the company’s sales on a quarterly basis.

Notably, GOOGL upped its capital expenditures (CapEx) guidance for its current fiscal year to $85 billion, up $10 billion from the prior mark. The increased spend remains aimed toward the data center and broader AI infrastructure buildout, a theme we’ll likely see discussed in MSFT’s and AMZN’s upcoming releases too.

Up 1.5% YTD, Alphabet shares have lagged the S&P 500 but nonetheless saw a nice charge higher following the latest release.

Microsoft Earnings Loom

EPS and sales expectations for MSFT’s upcoming release have largely remained unchanged, with the titan expected to see 14% EPS growth on 14% higher sales. While revisions haven’t budged much, the stability here in the revisions trends is still a positive takeaway, with the YoY growth rates also remaining sizable.

Below is a chart illustrating the company’s sales on a quarterly basis.

Microsoft Cloud and AI strength drove its latest set of strong results, with Microsoft Cloud revenue soaring 20% year-over-year to $42.4 billion. Demand has remained strong for the tech titan, with commentary alluding to the trend remaining for years to come.

Importantly, its Intelligent Cloud (includes Azure) revenue totaled a strong $26.8 billion, up 21% from the year-ago period. For the period to be reported, the Zacks Consensus estimate for Intelligent Cloud revenue stands at $28.9 billion.

Putting Everything Together

The 2025 Q2 earnings season picks up notable steam this week, with several Mag 7 members on the docket. Microsoft MSFT is among the bunch, whose cloud results and capex commentary will be watched intently.

A peer, Alphabet GOOGL, already delivered its quarterly results, with its cloud performance largely positive and providing decent read-throughs of what to expect from MSFT. Alphabet also upped its capex guidance, suggesting that MSFT might just do the same given the current AI frenzy.

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This article originally published on Zacks Investment Research (zacks.com).

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