Microsoft to report Q2 earnings with investors eyeing AI growth and spending

Core Viewpoint - Microsoft is set to report its fiscal second quarter earnings, with a focus on remaining performance obligations (RPO) as a key indicator of AI demand [1] Group 1: Financial Metrics - Microsoft reported $392 billion in RPO in the prior quarter, with expectations for a significant increase in Q2, driven by a $250 billion commitment to OpenAI and $30 billion agreements with Anthropic [2] - The company anticipates earnings per share (EPS) of $3.92 on revenue of $80.3 billion for the quarter, compared to EPS of $3.23 and revenue of $69.6 billion in the same quarter last year [4] - Commercial cloud revenue is projected to rise 25% to $51.2 billion, while gross margins are expected to decline by 4.89% [5] Group 2: Business Segments - Microsoft's Productivity and Business Processes segment is expected to reach $33.6 billion, reflecting a 14% year-over-year increase [5] - The Intelligent Cloud segment revenue is anticipated to grow by 26% to $32.2 billion, while the More Personal Computing business is projected to generate $14.3 billion [5] Group 3: Market Position and Competition - Microsoft is experiencing reaccelerating cloud revenue growth due to the AI boom, particularly benefiting its Azure business, although it faces capacity constraints [3] - Over the past 12 months, Microsoft's stock price has increased by 4%, slightly outperforming Amazon's 1.6% increase, but lagging behind Google's impressive 64% growth [6]