Microsoft guides Q2 revenue above consensus; sees Azure growth of 49-50% in CC
Outlook for Q2 (Dec):
- In Agents and Infrastructure, co expects revenue of $80.1-80.7 bln, or growth of 24-25%.
- In Azure, co expects revenue growth of 49-50% CC, with customer demand continuing to exceed available supply. Continued efficiency gains across its CPU and GPU fleet are expected to help support growth. Beyond Q2, yr/yr growth will reflect the timing of engineering efficiencies, new capacity additions, and stronger prior-year comparisons.
- Microsoft 365 commercial cloud revenue growth is expected to be approximately 19% CC.
- Microsoft 365 consumer cloud revenue should grow in the low teens.
- Microsoft Cloud gross margin is expected to be approximately 65%.
- In Devices and Consumer, co expects revenue of $15.9-16.4 bln.
- Capital expenditures in Q2 are expected to exceed $50 bln, bringing expected calendar-year 2026 spending to approximately $170 bln. Co expects CapEx to accelerate in 2H FY27, primarily driven by CPUs, GPUs, higher memory and storage costs, and third-party capacity deliveries delayed from Q1.
- Co expects to remain free cash flow positive in FY27.
Co issues upside guidance for Q2 (Dec), sees Q2 (Dec) revs of $96.0-97.1 bln vs. $95.63 bln FactSet Consensus.
MSFT is trading higher by 4.3% in after-hours trading at $553.73