Microsoft to report earnings as AI financial boom shows no sign of slowing

Core Viewpoint - Microsoft is set to report its third-quarter earnings, with analysts predicting a revenue growth of 10.6% year-over-year to $68.4 billion and earnings-per-share of $3.22, continuing a trend of exceeding Wall Street expectations in previous quarters [1][2]. Group 1: AI Investments and Performance - Microsoft is heavily investing in artificial intelligence, with plans to allocate around $80 billion in the current fiscal year, despite recent terminations of some data center leases [2][3]. - The company has reported a significant increase in its AI business, with a year-over-year growth of 175% last quarter [5]. - Microsoft executives have emphasized the transformative potential of AI, with claims that 20% to 30% of the company's code is now AI-generated, and predictions that this could rise to 95% within five years [4]. Group 2: Azure and Market Position - Investors are closely monitoring the performance of Microsoft's Azure cloud computing service, which experienced a revenue decline last quarter, while the company aims to expand its European data centers by 40% over the next two years [5]. - Microsoft has been relatively insulated from the financial risks associated with the Trump administration's trade policies, as its products and services are less dependent on international trade compared to other tech giants [9]. Group 3: Stock Performance and Market Context - Microsoft shares have seen a decline of approximately 7% since January, influenced by broader economic instability and competition from China-based developers in the AI space [10]. - The release of the DeepSeek AI app, a competitor to OpenAI's ChatGPT, triggered a selloff in Microsoft shares, although the company has since integrated this technology into its offerings [10].