Streaming video subscriptions might be more disposable than imagined, but the juggernaut of cloud infrastructure and enterprise services is another matter entirely.
That’s the underlying theory behind Wall Street’s expectation that Microsoft’s revenue grew nearly 18%, to more than $49 billion, for the three months ended March 31, the third quarter of the Redmond company’s 2022 fiscal year.
Microsoft reports earnings Tuesday afternoon, followed by companies including Apple and Amazon later in the week, as Wall Street looks for the broader industry to rebound from Netflix’s first subscriber loss in more than a decade.
“We believe large transformational cloud deals at MSFT are up north of 50% with clear momentum in 2022 and also some incremental share gains from AWS could be in the cards,” wrote Daniel Ives, a Wedbush analyst, predicting that Microsoft Azure will show progress against the Amazon Web Services cloud division in the quarter.
He added, “We are seeing deal sizes continue to increase markedly despite macro jitters as enterprise-wide digital transformation shifts are accelerating with CIOs all focused on readying their respective enterprises for a cloud driven architecture with MSFT poised to beat Azure whisper growth numbers of ~45% this quarter.”
This contrasts with the popular view that cloud growth will slow as the work-from-home trend loses steam, he notes.
On average, analysts expect Microsoft to report profits of $2.18 per share, up from $2.03 a year ago.
Apart from an update on Microsoft’s cloud business, we’ll be listening for any updates from Microsoft CEO Satya Nadella on the Activision-Blizzard acquisition, cybersecurity revenue, Cloud PC adoption, Office and Microsoft Teams growth, and the impact of national and global issues such as inflation and the war in Ukraine.