Microsoft’s CEO, Satya Nadella, has highlighted the significant financial potential of artificial intelligence (AI) for the company, its partners, and overall economic growth. Despite recent challenges such as high-profile AI deepfakes, an FTC investigation, a lawsuit from The New York Times, and a brief management restructuring at OpenAI, Microsoft’s key AI collaborator, the company aims to demonstrate the positive impact of AI on its business.
In the upcoming earnings report on Tuesday, Jan. 30, for the second quarter of the 2024 fiscal year, Microsoft is expected to reveal revenue exceeding \(61 billion, marking a 16% increase compared to the same period last year. Earnings per share are projected to reach around \)2.76, reflecting a 19% rise in profits. This report coincides with a significant week for big tech companies, including Amazon, Apple, Meta (formerly Facebook), and Alphabet (Google’s parent company).
Microsoft’s latest offering, Copilot Pro, competes with OpenAI’s services and provides an alternative AI solution for businesses. The launch of Microsoft 365 Copilot, the company’s primary AI product, could offer insights into the impact of AI on its Productivity and Business Processes segment. Businesses are charged an extra \(30 per user monthly for Microsoft 365 Copilot, on top of existing subscription plans ranging from \)12.50 to $57 per user per month.
Satya Nadella previously estimated that the next generation of AI technology could drive an additional \(7 to \)10 trillion in global GDP growth in an economy valued at around \(100 trillion. This optimistic outlook has contributed to a more than 21% increase in Microsoft’s shares over the past six months, propelling the company’s market value to over \)3 trillion for the first time.
The earnings report will serve as a crucial indicator of AI spending pace, not only for Microsoft but for the broader industry. Analysts anticipate that Copilot deployments with Microsoft customers could potentially add approximately $25 billion to the company’s top-line by FY25. In the previous quarter, revenue from Microsoft’s Azure OpenAI service significantly boosted the overall growth of Azure and cloud services.
Apart from AI, key aspects to monitor in the earnings report include the financial impact of the Activision Blizzard acquisition, hiring trends, and security revenue disclosures. Microsoft’s recent strategic moves and developments will be closely scrutinized to assess the company’s financial performance and market positioning.
Stay tuned for comprehensive coverage of Microsoft’s earnings report on Tuesday afternoon.
