Microsoft Set for Strong Earnings, Analysts Say. AI and Cloud Revenue Is Critical.

The tech company reports earnings on July 30. (Drew Angerer/Getty Images)

With its fiscal fourth-quarter earnings just two weeks away, Microsoft is on track for another round of strong results, analysts say.

The software company has increased its per-share earnings relative to a year earlier for nine consecutive quarters, and Wall Street expects a tenth when the company reports results on July 30. Strength in artificial intelligence and spending on cloud computing among commercial clients remain the main sources of growth, analysts say.

Microsoft was up narrowly to $506.30 Wednesday. With a market capitalization of nearly $3.8 trillion, it could become the second company after Nvidia to reach the $4 trillion mark.

Thomas Blakey of Cantor Fitzgerald sees Microsoft getting there soon. In a research note, Blakey reiterated an Overweight rating for the stock and boosted his price target to $581 from $512, after industry checks with two Microsoft cloud partners indicated a positive medium-term outlook fueled by AI and the company’s Azure cloud-computing platform.

Blakey expects earnings to fall in line with expectations, which should sustain momentum for a stock that has already jumped 20% so far this year.

Mizuho Securities analyst Gregg Moskowitz was similarly optimistic about Azure after the firm’s industry checks. He called Microsoft one of his favorite stocks to own ahead of tech companies’ coming earnings reports.

Microsoft is projecting 34% to 35% year-over-year growth in Azure revenue for the June quarter, and Moskowitz expects the company to hit the high end of that range, he wrote in a research note Wednesday. Mizuho raised its price target for Microsoft shares to $540 from $500 and maintained an Outperform rating for the stock.

Dan Ives of Wedbush Securities is perhaps even more bullish on Microsoft. He said in a note Wednesday that Wall Street hasn’t yet priced in the company’s growth prospects from AI. Growth in Azure and Microsoft’s Intelligent Cloud unit should mean another strong result, Ives said.

“It has become crystal clear to us that the monetization opportunities around deploying AI in the cloud is a transformational opportunity,” Ives wrote. “We believe Microsoft is just hitting its next phase of monetization on the AI front.”

Wedbush maintained an Outperform rating and a $600 price target for Microsoft shares. In June, Wedbush Fund Advisers launched the Dan IVES Wedbush AI Revolution ETF , which includes Microsoft and the other Magnificent Seven stocks.

Write to Nate Wolf at nate.wolf@barrons.com