Microsoft (MSFT) releases its latest earnings on Tuesday, which is essential for the US tech rally and the stock.
MSFT – Daily Chart
MSFT found support at the July 2023 highs and soared again in 2024. However, earnings could threaten the rally.
The computing and software giant’s stock price has soared dramatically since January 2023, but the AI hype will need to deliver.
AI gains have come for semiconductor companies as they supply corporate demand for AI platforms. But those platforms must show consumer demand. Microsoft’s ChatGPT and Copilot tools will be necessary in the coming earnings release.
MSFT’s second-quarter fiscal 2024 results are set for release on January 30 after the US market closes, and analysts will again look at consistent cloud growth. For the company’s fiscal second quarter, analysts expect Intelligent Cloud revenues of between $21.5 billion and $25.4 billion.
Microsoft has benefited from continued demand for cloud infrastructure, web-based applications, and human resources solutions. Many firms have shifted their workloads to the cloud. However, macroeconomic shifts can hurt spending, and the current stock price remains elevated and lined up for a correction.
In its Azure cloud platform, Microsoft expects revenue growth of 26-27%, with increasing contributions from AI. However, continued lofty projections are at risk if analysts see a sign of slowing growth.
The other issue will be the demand for the company’s premium version of the Copilot AI assistant. That was priced at $30 per month, and demand may be weak at that price tag.
Microsoft’s leadership in the AI rally could mean that a Nasdaq sell-off comes with disappointing earnings. At the same time, the reverse is likely to be the case for more robust earnings.
