Preview | Microsoft Azure's growth rate may slow down again! But the market focus is still on AI.
But it should be noted that although the AI trend is strong at present, many products are still in the testing stage. Investors may need several years to see Microsoft obtain more financial returns from related products and even the billions of dollars invested in OpenAI.
Just tonight after the US stock market! Microsoft is about to join forces with Alphabet-C, the parent company of Alphabet-C, to kick off the tech stock earnings week.
The market generally expects that Microsoft's revenue for the quarter (the third quarter of the 2023 fiscal year ending March 31) will increase by 3% year-on-year to slightly higher than $51 billion, which is basically consistent with Microsoft's previous expectations. It also means that Microsoft will achieve lower single-digit growth for the second consecutive quarter, not the glory of double-digit growth when it just emerged from the epidemic.
Analysts also expect Microsoft's earnings per share for the quarter to be $2.23, which is basically flat compared to the same period last year.
The reason why Microsoft's growth has slowed down is directly related to the reduction of enterprise customer technology budgets in the context of economic weakness-when Microsoft's core business, that is, enterprise spending on cloud services and software licenses, becomes more cautious, Microsoft's days will naturally not be too easy.
However, since this year, Microsoft has already made a big splash in the OpenOpenAI, ChatGPT, Microsoft 365 Copilot and other OpenOpenAI tracks. Investors are also very eager to know more about the company's OpenOpenAI function progress and products combined with the latest version of GPT-4.
But it is worth noting that although the OpenOpenAI trend is currently strong, many products are still in the testing phase. It may take several years for investors to see Microsoft obtain more financial returns from related products and even billions of dollars in investment in OpenOpenAI.
Relatively speaking, Wall Street recommends that everyone pay more attention to the growth rate of Microsoft Azure cloud business. In the conference call of the previous quarter, Microsoft CFO Amy Hood said that Azure's growth rate at the end of the second quarter of the 2023 fiscal year was about 35%, and it is expected to drop by 4-5 percentage points in the third quarter.
In response, Microsoft CEO Nadella explained that this is because the company is helping customers optimize their cloud spending, that is, sacrificing short-term growth to maintain the long-term interests of the business.
In this way, against the background that OpenOpenAI has not yet matured and cannot significantly boost the company's revenue, and enterprise IT spending and cloud services are both extinguished, Microsoft's performance may be overshadowed again.
