On Tuesday, Microsoft (MSFT) is set to report earnings for its fiscal third quarter. While the tech giant has been riding the hype surrounding generative AI, a decline in cloud revenue may dampen its results. Analysts are expecting revenue of $51.1 billion, an increase from $49.3 billion in Q3 2022, and an adjusted earnings per share of $2.23, up slightly from $2.22 in the same quarter last year.
Microsoft’s investment in OpenAI has cemented its position as a leader in the AI space, with its technology being implemented in Edge, Bing, Microsoft 365, and cybersecurity offerings. However, the company’s growth driver remains its cloud computing efforts in Azure, which have slowed over the last year due to customers cutting back on spending and flagging PC sales. Worldwide PC shipments have declined by 30% in the first quarter of 2023, according to Gartner.
Analysts are calling for a year-over-year drop of 15.5% to $12.3 billion in Microsoft’s More Personal Computing segment, which includes sales of Windows to third-party PC makers. Investors and analysts will also be looking out for the impact of the company’s January layoffs, which saw 10,000 positions cut across various business segments as the company tries to reconfigure its workforce post-pandemic.
