Microsoft Reports Q1 Earnings Tuesday: What This Analyst Says Is The 'Linchpin' To Long-Term Bull Case

Microsoft Corporation MSFT is scheduled to report first-quarter results Tuesday after the market close.

The Microsoft Analyst: Wedbush analyst Daniel Ives maintained an Outperform rating and $320 price target for Microsoft shares ahead of the print.

The analyst also named the stock as one of the firm’s top picks in tech heading into 2023.

The Microsoft Takeaways: Given the macro backdrop for global enterprise and cloud spending, the Street will watch Microsoft’s earnings report and guidance closely to determine if demand remains healthy for cloud spending, Ives said in a note.

Despite forex issues, Microsoft could meet or slightly exceed the Street revenue estimate of $49.7 billion, the analyst said.

He attributes the optimism to some cloud strength on the federal/enterprise front. The analyst said he views the consensus earnings per share estimate of $2.31 to be conservative due to the aggressive cost-cutting initiatives by the company.

See also: Why This Microsoft Analyst Is Lowering Their Price Target Ahead Of Q1 Earnings

The company expects Productivity and Business Processes revenue of $15.95 billion to $16.25 billion, and Intelligent Cloud revenue in the range of $20.30 billion to $20.6 billion, with Azure revenue growth at 43%, Ives said.

Azure growth, the analyst said, may have held up relatively well, barring some soft spots in Europe and small and medium businesses.

Personal Computing revenue could see softness due to softening demand, which could be a headwind for Microsoft, the analyst said. The company guided to revenue of $13 billion to $13.4 billion for the segment, he said.

“That said, this dynamic is well understood by the Street with all laser focus on the company's Azure and cloud growth, which is the linchpin to the Microsoft long-term bull thesis,” Ives said.

MSFT Price Action: Microsoft shares closed Friday’s session at $242.12, up 2.53%, according to Benzinga Pro data.

Read Next: How to Buy Microsoft (MSFT) Stock

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