Microsoft Q1 results: All eyes on the future of AI
By Kyle Rodda
10:10, 24 October 2023
Microsoft (MSFT) will deliver its Q1 earnings after the closing bell on Tuesday. We preview what the markets are expecting heading into the results.
What are analysts forecasting for Microsoft’s Q1 results?
|Revenue||EPS||Cloud Revenue||2Q EPS Guidance|
|Estimate||$54.54B (8.8%)||$2.65 (13.1%)||$23.6B (16.15%)||$2.66|
According to data sourced by Bloomberg, analysts predict Microsoft will deliver a robust set of Q1 results. Revenues are forecast to climb 8.8% to $54.54B for the quarter, to drive a 13.1% increase in EPS to $2.65. Microsoft’s Azure cloud platform is expected to remain the main driver of Microsoft’s growth, with analysts projecting revenues for the business segment to rise 16.15% to $23.6B.
Investors will probably focus more on the qualitative information from Microsoft’s results. Microsoft is making sizable investments to drive AI integration into its products, especially its Azure platform. ]According to the same Bloomberg data, estimates for Azure revenues haven’t shifted through this period of AI mania; investors are likely to search for information about when it may translate into higher revenues and what capital expenditure will be required to get there.
Bloomberg data suggests analysts forecast Q2 earnings per share guidance to be mainly in line with Q1 at $2.61. However, that would represent 16% earnings growth.
Broker recommendations and consensus price target
|Buy||Hold||Sell||Consensus Price Target|
Analysts remain overwhelmingly bullish on Microsoft’s stock. According to Bloomberg surveys, 56 brokers favour buying the stock, six suggest holding, and none call for a sell. The consensus price target is also at a meaningful premium to market value at $397.56.
Microsoft share price: technical analysis
Microsoft’s technicals look constructive, with the stock in a primary uptrend. After hitting all-time highs in July, the share price has pulled back in what currently looks like consolidation.
Going into results, the option implied 1-day move is approximately 4%.