Microsoft (MSFT) Q2 2024 Earnings Preview

Microsoft MSFT Q2 2024 Earnings Preview

Microsoft Corporation (NASDAQ: MSFT) will report fiscal Q2 2024 results on Tuesday, January 30, 2024, after the market close. Here are the key numbers that we’re watching.

Figure 1: Microsoft – consensus expectations for Q2, past earnings surprises, consensus revisions, and CAGR

Microsoft Earnings Preview

Source: Visible Alpha consensus (January 24, 2024). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.

Microsoft Q2 2024 Earnings Preview

According to Visible Alpha consensus, total revenues expected for Q2 have remained around $61 billion since October, driven by resilience in its core business segments. In particular, the Intelligent Cloud segment, which makes up over 40% of total revenues, is projected to remain solid, with consensus estimates around $104 billion for FY2024, driven by Azure. The profitability of this segment is a source of debate among analysts. Currently, the Q2 2024 consensus of 14 analysts for the Intelligent Cloud business’s operating profit margin is 44%, but ranges from 41% to 47%, suggesting this segment may deliver a surprise in the Q2 release.

We are closely watching what the company will say about the outlook for AI and Copilot, as Microsoft’s FY 2024 CapEx numbers have continued to increase steadily since last year. According to consensus projections, CapEx estimates have climbed $13 billion from $29 billion in January 2023 to currently $42 billion in FY 2024, up 3x from FY 2019 and ahead of both Meta’s (NASDAQ: META) and Alphabet’s (NASDAQ: GOOGL) estimated CapEx levels.

Microsoft stock has traded up 21% since the October earnings release, and is up 9% year-to-date, outperforming the S&P 500. Could the Q2 release help drive further growth and momentum in the stock?

Figure 2: Microsoft consensus estimates

Microsoft Consensus Estimates

Source: Visible Alpha consensus (January 24, 2024). Stock price data courtesy of FactSet. Alphabet stock price is as of the market close on January 23, 2024.


About Melissa Otto, CFA

Melissa is Head of TMT Research at Visible Alpha. She spent 20+ years as an equity analyst and portfolio manager. At TIAA/Nuveen, Melissa specialized in covering global technology and consumer stocks and the Pan-Asia region. She also managed one of Fidelity's equity research teams as a director of research. In addition to her equity investing career, Melissa worked directly with software engineering teams at Bloomberg, Microsoft, and MSCI building cloud-based solutions to centralize and aggregate critical investment data for investors. Melissa studied Japanese at Harvard University, received her MA in economics from Brandeis University and MS degree from the University of Pennsylvania, and is a CFA charterholder. She is certified in Azure Fundamentals and Agile Project Management.

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