Microsoft (MSFT) will publish its second quarter results after the Bell on Wednesday while Wall Street continues to digest the impact of Deepseek on the AI industry and the technological titans of Silicon Valley.
Microsoft and its Big Tech cohort are investing tens of billions of dollars in data centers and the infrastructure necessary to train and deploy AI software on their various services. But the depth of China has upset the general thought that the development of AI models requires the use of the most powerful and costly tokens with the exit of its Model R1 on January 20.
The model, says the company, has been trained on less powerful and cheaper systems than those produced by American rivals such as the Openai supported by Microsoft, Google (Googl, Googl) and Meta (Meta).
The application of the company turned at the top of the App Store during the weekend, arousing a huge amount of interest in the relatively small company and the AI American actions, notably AI Bellwether Nvidia.
Now Microsoft will have to prove not only that his own work of AI is paid in terms of increased income, but also that his investments in strong infrastructure is really necessary.
For the quarter, Microsoft is expected to declare a profit per share (BPA) of $ 3.13 on a turnover of $ 68.8 billion, according to Bloomberg consensus data. The company declared a BPA of $ 2.93 on a turnover of $ 62 billion in the same quarter last year.
Above all, commercial income from the Microsoft Cloud segment, which includes sales of cloud service, are expected to reach $ 41.1 billion. It would be an increase compared to the $ 31.9 billion that the company said in the first quarter last year. Its intelligent cloud activity, which includes its Azure platform, is expected to reach $ 25.8 billion, compared to $ 21.5 billion.
In a note to investors, Jefferies analyst, Brent Thill, said that he thought that Azure growth will begin to react in in the second half of 2025.
“Our checks continue to indicate the improvement of consumption trends / basic clouds,” he wrote. “Also, [Microsoft] I have just announced that “Openai recently made a new Azure commitment which will continue to support all OPENAI products as well as training”. “”
While Microsoft is one of the main beneficiaries of AI boom, its scholarship course has been delayed on competition. Microsoft’s shares have only increased by 5% in the last 12 months on Monday, while Amazon (AMZN) and Google shares increased 44% and 26% respectively.
Evercore ISI analyst Kirk Materne said, however, that the stock could be set up for a “mini revenge business” as the sales of AI increases, his co -pilot adoption rate improves And moderate capital expenses, creating more available cash flows.
