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Can Strength in Azure Cloud Aid Microsoft (MSFT) Q4 Earnings?

·3 min read

Microsoft’s MSFT fourth-quarter fiscal 2022 results, scheduled to be reported on Jul 26, are likely to have been driven by the continued strength in its cloud platform — Azure. The platform has been benefiting from the pandemic-led digital transformation across the globe.

For the fiscal fourth quarter, Microsoft expects Intelligent Cloud revenues (Azure falls under the segment) between $21.1 billion and $21.35 billion. Azure’s revenue growth is likely to have been driven by continued strength in consumption-based services.

The Zacks Consensus Estimate for Intelligent Cloud segment revenues is currently pegged at $21.13 billion, indicating 21.6% growth from the figure reported in the year-ago quarter.

Microsoft Corporation Price and Consensus

Microsoft Corporation Price and Consensus
Microsoft Corporation Price and Consensus

Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote

Azure to Drive Top-Line Growth

The increasing migration of workloads to the cloud is fueling demand for cloud infrastructure monitoring, web-based application performance management and human capital management solutions. This is driving demand for Microsoft’s cloud service.

Microsoft’s Azure has a presence in more than 60 regions worldwide and is available in 140 countries. Azure’s increase is anticipated to have bolstered its cloud business and strengthened its competitive position against Amazon’s AMZN Amazon Web Services and Alphabet’s GOOGL Google Cloud.

In the last reported quarter, Amazon’s AWS revenues (16% of total company sales) rose 37% year over year to $18.4 billion. The expansion of its AWS services portfolio is helping Amazon maintain its dominance in the cloud domain by gaining more customers.

In first-quarter 2022, Alphabet recorded a 43.8% year-over-year jump in Google Cloud revenues to $5.8 billion, which contributed 8.6% to its quarterly revenues.

Microsoft reported a 46% year-over-year increase in Azure and other cloud services’ revenues in third-quarter fiscal 2022. The upside was driven by robust growth in the consumption-based business.

Noteworthy Healthcare Moves

Microsoft has been taking initiatives to boost its presence in the healthcare space. The pandemic is driving the digital transformation of the healthcare system.

The company has been striving to gain more opportunities presented by the rapid digitalization of the healthcare industry.

Microsoft Cloud for healthcare solutions has been helping healthcare providers enhance patient engagement and clinician experiences, empower health team collaboration and improve clinical and operational insights.

Key Q4 Announcements

On Jun 8, Microsoft announced a multi-year collaboration with The Proctor & Gamble Company PG. As part of the deal, Microsoft will co-innovate with P&G to accelerate and expand the digital manufacturing platform of the latter.

P&G is already innovating and using Azure IoT Hub and IoT Edge to help manufacturing technicians analyze insights with greater speed and efficiency, creating improvements in the production of its baby care and paper products with pilot projects happening in Egypt, India, Japan and the United States.

On Jun 14, Microsoft announced plans to acquire Miburo, a cyber-threat analysis and research start-up. As part of the agreement, Microsoft will use Miburo’s cybersecurity tech to partner with other companies, in the public and private sectors, to find solutions that keep customers safe online.

Microsoft currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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