- Cloud and AI: Microsoft’s Core Growth Engines
- Microsoft Q1 Earnings: What the Street Is Expecting
- Why Microsoft Stock is in Spotlight Now
- What Could Influence Microsoft Q1 Results
Microsoft has again found itself at the centre of investor attention. With the tech giant set to announce its Q1 FY26 earnings on October 29, 2025, the market is closely watching how its cloud and AI investments are translating into real growth. Analysts expect another strong quarter, but expectations are sky-high which makes this one particularly important.
Let’s break down why Microsoft stock is in focus, what’s driving the attention, and what investors, including those in India, should look out for.
Cloud and AI: Microsoft’s Core Growth Engines
Over the past few years, Microsoft has transformed itself into a cloud and AI powerhouse. Its Intelligent Cloud segment, which includes Azure and related services, has become the company’s main growth driver.
In FY25, Microsoft’s total revenue stood at $281.7 billion, up about 15% YoY. Net income rose by a similar margin to $101.8 billion. A big part of that growth came from Azure and enterprise cloud products.
For the upcoming quarter, analysts expect Azure’s revenue to grow by nearly 40% YoY, continuing its momentum as one of the top cloud providers worldwide. That’s especially impressive in a space dominated by Amazon Web Services and Google Cloud.
Microsoft Q1 Earnings: What the Street Is Expecting
According to consensus estimates, Microsoft is expected to post:
- Revenue: Around $75.4 billion
- Earnings per Share (EPS): Roughly $3.67
If these numbers hold, it would mark another solid double-digit growth quarter for Microsoft. The most anticipated figure, however, will be Azure’s growth rate. Investors are looking for evidence that demand for AI workloads and cloud infrastructure remains strong.
Additionally, the management’s comments on capital expenditure and margins will be under scrutiny. Microsoft’s AI ambitions come with heavy spending. Reports suggest capex for Q1 could reach $30 billion, a massive figure even by Big Tech standards.
The company has acknowledged that these investments are pressuring cloud margins, which stood near 67% in the previous quarter. The key question is whether those costs will eventually translate into higher long-term profitability.
Why Microsoft Stock is in Spotlight Now
Microsoft’s recent momentum is more than just hype. It’s about performance. In the last quarter, the company posted $76.4 billion in revenue, up 18% YoY, driven by cloud demand and AI integration. Analyst upgrades have also fueled the spotlight. Guggenheim and other research houses have raised their price targets, citing Microsoft’s ability to capture enterprise AI spending.
This comes at a time when most tech companies are either cutting guidance or slowing down on capex. Another factor is perception. Among mega-cap tech names, Microsoft is seen as a stable, well-run company that’s executing effectively. It’s less exposed to advertising cycles or hardware sales, unlike peers such as Meta and Apple.
In short, while AI is the theme of the decade, Microsoft is one of the few companies showing actual revenue from AI products, not just promises.
What Could Influence Microsoft Q1 Results
1. Cloud Margins: AI infrastructure spending is massive, and investors will be listening for management’s comments on whether cloud margins have stabilized.
2. Productivity and Business Processes: Products like Microsoft 365, LinkedIn, and Dynamics are expected to bring in about $32 billion in Q1, up roughly 14% YoY. These segments are the steady cash machines that fund new investments.
3. More Personal Computing: This includes Windows and gaming (Xbox). Analysts forecast a slight decline of around 3–4% YoY, reflecting weakness in the global PC market.
4. Currency and Macro Impact: As a global company, Microsoft’s revenue is influenced by foreign exchange rates. A stronger U.S. dollar could slightly dent growth, though the overall impact is expected to be minimal this quarter.
Why It Matters for Indian Investors
For people investing in US Stocks from India through platforms like INDmoney, Microsoft is an entry point into two of the fastest-growing global themes, cloud computing and artificial intelligence. What’s giving Microsoft an extra edge is its early and deep integration of Generative AI.
The company’s partnership with OpenAI, as well as its deployment of “Copilot” features across products like Microsoft 365, Teams, and GitHub, is already driving incremental revenue. A CIO survey by Barron’s found that 37% of global tech leaders expect Microsoft to be the biggest corporate beneficiary of GenAI spending in the next three years.
Since Microsoft’s growth is driven by global enterprise spending rather than consumer demand, it’s less affected by short-term domestic factors. However, valuation remains an important consideration. With the company already trading at a premium, the Q1 results will determine whether there’s room for further upside.
For long-term investors, the focus should be on three key numbers: Azure’s growth rate, cloud operating margins, and the pace of AI monetisation.
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