Will Cloud Results Boost Microsoft Earnings?
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.
Higher. Faster. Sooner. Buy These Stocks Now
A small number of stocks are primed for a breakout, and you have a chance to get in before they take off.
At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We've combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month.
You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days.
Download the report free now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Microsoft Corporation (MSFT): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
a day ago
- Globe and Mail
Here's How Alphabet Can Become the World's Second $4 Trillion Company
Key Points The company generates the most profits among its big tech peers. Investors are worried about the legacy search business. But Alphabet has proven that it's here to stay. 10 stocks we like better than Alphabet › Nvidia made history by becoming the world's first $4 trillion company, and no other company has achieved this feat. Currently, Microsoft and Apple are in second and third place but have a bit of work to do with their $3.8 trillion and $3.2 trillion market caps, respectively. However, there's a dark horse that could beat those two to the $4 trillion threshold: Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), the world's fifth-largest company by market cap with a valuation of $2.5 trillion. That's a long way away from $4 trillion and significantly behind Microsoft and Apple. But there's one factor that Alphabet has going for it that gives it a solid argument for reaching $4 trillion before any of the companies ahead of it. Alphabet's second quarter was dominant Alphabet is likely better known by the businesses that it owns: Google, YouTube, Waymo, and the Android operating system. It has a dominant empire in various niches, but its most important is Google Search. In the second quarter, Google Search generated $54 billion of the company's revenue of $96 billion. That's a large chunk of its total, so it needs to continue having this division perform well to succeed as a whole. However, there are some early warning signs that have investors concerned. The most significant technologies in generative artificial intelligence (AI) have the potential to transform how people use the internet. Currently, the vast majority of people seek information using Google Search. That could change if generative AI becomes more widely adopted by the masses. The market broadly assumes that it will replace Google, but that seems far from reality. One area where Google has bridged the gap is with AI search overviews, which give users a generative AI-powered summary of their search results. Management discussed the popularity of this feature during its second-quarter conference call and provided a couple of key insights for investors. First, AI overviews now have over 2 billion users in 40 different languages, showcasing its widespread appeal. Another huge revelation for investors is that it sees the same monetization as regular search results, so it's not harming Google's business at all by heavily investing in this technology. This showed up in Alphabet's results, as Google Search revenue rose 12% year over year. That's an acceleration from the 10% year-over-year growth in the first quarter. This isn't a sign of a dying business; it's a sign of one that's growing. As a result, there's no reason for Alphabet to trade at a significant discount to its big-tech peers, since it's growing just as fast (if not faster) than most of them. Its peers fetch a much higher premium The four companies ahead of Alphabet in market cap are Nvidia, Microsoft, Apple, and Amazon. Compared to these four, Alphabet trades at a huge discount. GOOGL PE Ratio data by YCharts; PE = price to earnings. However, over the past 12 months, Alphabet has produced the most net income of any of these companies. GOOGL Net Income (TTM) data by YCharts; TTM = trailing 12 months. Alphabet actually produces the most profit of any company that trades on U.S. exchanges, and if it received the same multiple as its peers, it would be the largest company in the world (in some cases). Company Trailing P/E Alphabet's Valuation at That Premium Nvidia 56.0 $6.47 Trillion Microsoft 39.7 $4.59 Trillion Apple 33.3 $3.85 Trillion Amazon 37.7 $4.36 Trillion Data source: YCharts. So, if the company were to receive the same respect as its peers, it would already be the world's largest company. Whether you think most of the big tech stocks are overvalued or if you think Alphabet is undervalued, it doesn't matter. It has some of the best chances of beating the market over the next few years due to its low valuation and impressive growth, considering its size. I think it's a top stock to buy now, and it makes even more sense if you're concerned that the market in general is getting too expensive. Should you invest $1,000 in Alphabet right now? Before you buy stock in Alphabet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $625,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,090,257!* Now, it's worth noting Stock Advisor's total average return is 1,036% — a market-crushing outperformance compared to 181% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Keithen Drury has positions in Alphabet, Amazon, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Globe and Mail
a day ago
- Globe and Mail
Amazon (AMZN) Receives a Buy from RBC Capital
In a report released today, Brad Erickson from RBC Capital maintained a Buy rating on Amazon, with a price target of $240.00. The company's shares closed yesterday at $234.11. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. According to TipRanks, Erickson is a 5-star analyst with an average return of 21.6% and a 58.85% success rate. Erickson covers the Communication Services sector, focusing on stocks such as Zillow Group Class A, Meta Platforms, and Alphabet Class A. Amazon has an analyst consensus of Strong Buy, with a price target consensus of $262.36, implying a 12.07% upside from current levels. In a report released today, Barclays also maintained a Buy rating on the stock with a $275.00 price target. Based on Amazon's latest earnings release for the quarter ending March 31, the company reported a quarterly revenue of $155.67 billion and a net profit of $17.13 billion. In comparison, last year the company earned a revenue of $143.31 billion and had a net profit of $10.43 billion
Globe and Mail
a day ago
- Globe and Mail
Why Arm Holdings Stock Sank by Over 15% This Week
Key Points The company's second-quarter results displeased many investors. They also inspired some analyst price target cuts. 10 stocks we like better than Arm Holdings › Arm Holdings (NASDAQ: ARM) felt something like an unwanted limb over the past few days, largely because of an earnings report that struck the wrong chord with more than a few investors. Several analyst price target cuts only highlighted this disappointment. Ultimately, according to data compiled by S&P Global Market Intelligence, the specialty tech company's shares plummeted by over 15% this week. Top-line growth, bottom-line slide U.K.-based Arm published its results for the first quarter of its fiscal 2026 on Wednesday. The report showed that the company managed to increase its total revenue by 12% year over year to slightly more than $1.05 billion. That was largely due to a 25% increase in royalty revenue, which landed at $585 million, and despite a 1% slump in licensing revenue to $468 million. Non- GAAP (adjusted) net income traveled in the opposite direction. It fell to $374 million, or $0.35 per share, compared with the year-ago profit of $419 million. With those numbers, Arm met the consensus analyst estimate for profitability, although it missed slightly on revenue -- pundits following the stock were expecting it to earn $1.06 billion. More of a concern for investors was management's guidance for the company's current (second) quarter. Its forecast is for $1.01 billion to $1.11 billion in revenue, which, if achieved, would be down or, at best, essentially flat over the first quarter. Meanwhile, adjusted earnings were forecast at $0.29 to $0.37. Bearish analyst moves Although analyst reactions to the quarter were mixed, enough pundits trimmed their price targets to affect sentiment on the stock. UBS 's Timothy Arcuri, for one, shaved his fair value assessment to $175 per Arm share from his preceding $185. He did, however, maintain his buy recommendation. Lee Simpson of Morgan Stanley acted similarly, reducing the price target to $180 per share from $194 while keeping an overweight (buy, in other words) rating intact. Should you invest $1,000 in Arm Holdings right now? Before you buy stock in Arm Holdings, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Arm Holdings wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $625,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,090,257!* Now, it's worth noting Stock Advisor's total average return is 1,036% — a market-crushing outperformance compared to 181% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025
