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Momentum in Azure Cloud to Aid Microsoft's (MSFT) Q2 Earnings

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Microsoft’s (MSFT - Free Report) second-quarter fiscal 2022 results, scheduled to be reported on Jan 25, are likely to have been driven by the continued strength in its cloud platform — Azure. The platform has been benefiting from the pandemic-led digital transformation across the globe.

For the fiscal second quarter, Microsoft expects Intelligent Cloud revenues (Azure falls under the segment) between $18.1 billion and $18.35 billion. Azure’s revenue growth is likely to reflect continued strength in consumption-based services.

The Zacks Consensus Estimate for the Intelligent Cloud segment revenues is currently pegged at $18.26 billion, indicating growth of 25.1% from the figure reported in the year-ago quarter.

Click here to know how Microsoft’s overall fiscal second-quarter performance is expected to have been.

Azure to Drive Top-Line Growth

The increasing migration of workloads to the cloud is fueling demand for cloud infrastructure monitoring, web-based application performance management and human capital management solutions. This is driving demand for Microsoft’s cloud service.
 

 

Azure’s increased availability in more than 60 announced regions worldwide is anticipated to have bolstered its cloud business and strengthened its competitive position against Amazon’s (AMZN - Free Report) Amazon Web Services (AWS) and Alphabet’s (GOOGL - Free Report) Google Cloud.

In the last-reported quarter, Amazon’s AWS revenues (15% of total company sales) rose 39% year over year to $16.1 billion. The expansion of its AWS services portfolio is helping Amazon maintain its dominance in the cloud domain by gaining more customers.

Meanwhile, in third-quarter 2021, Alphabet recorded a 44.9% year-over-year jump in Google Cloud revenues to $4.9 billion, which contributed 7.7% to quarterly revenues.

Microsoft reported a 50% year over year (up 48% at constant currency) increase in Azure and other cloud services’ revenues in first-quarter fiscal 2022. The upside was driven by robust growth in consumption-based business.

Healthcare Moves Noteworthy

Microsoft has been taking initiatives to boost its presence in the healthcare space. The pandemic is driving the digital transformation of the healthcare system.

This Zacks Rank #2 (Buy) stock is striving to gain more opportunities presented by the rapid digitalization of the healthcare industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the to-be-reported quarter, Microsoft inked a partnership with CVS Health (CVS - Free Report) to help the latter ramp up its digital transformation endeavors.

CVS Health selected Microsoft as its preferred cloud provider and the companies will also work together to develop advanced solutions to enhance customer health outcomes.


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