Will Cloud Results Boost Microsoft Earnings?

Core Insights - The Q2 earnings season for 2025 is gaining momentum, with several S&P 500 companies, including Microsoft (MSFT), set to report results [1][10] - Alphabet (GOOGL) has already reported strong quarterly results, particularly in its Cloud segment, which may provide insights into Microsoft's upcoming performance [1][11] Alphabet's Performance - Alphabet's Google Cloud revenue increased by 32% year-over-year, reaching $13.6 billion, with operating income in the segment more than doubling [2] - The company raised its capital expenditures (CapEx) guidance for the fiscal year to $85 billion, an increase of $10 billion, focusing on data center and AI infrastructure [5] - Despite being up 1.5% year-to-date, Alphabet shares have underperformed compared to the S&P 500 but saw a positive reaction post-earnings release [5] Microsoft Expectations - Microsoft is expected to report a 14% growth in EPS and a 14% increase in sales, with stability in revision trends being a positive indicator [7] - The company’s Cloud revenue is anticipated to rise by 20% year-over-year to $42.4 billion, with Intelligent Cloud revenue projected at $28.9 billion, reflecting a 21% increase from the previous year [9] - The upcoming earnings report will be closely watched for insights on cloud performance and potential CapEx adjustments in light of the current AI trends [10][11]