Microsoft reports fiscal first-quarter results on Wednesday after the US market close, with growth at Azure, its cloud computing platform, the figure most likely to move the shares.
The company has guided to revenue of $89.85 billion to $90.95 billion, up 16% to 17%.
Analysts expect $90.6 billion and earnings of $4.73 a share.
Microsoft guided Azure growth to about 45% in constant currency, which strips out exchange-rate moves, against a consensus of 44.8%.
This is the first quarter reported under Microsoft's two-segment structure, and the first with Azure revenue given in dollars.
Azure brought in $29.4 billion in the June quarter and more than $100 billion in fiscal 2026, so investors can now model a revenue line rather than argue over a growth rate.
Backlog and capacity
Commercial remaining performance obligation, the value of contracted work not yet recognised as revenue, stood at $678 billion in June.
It was up 25% even excluding OpenAI, and it shows how much customer spending is already signed.
Management has said demand will stay ahead of supply through fiscal 2027, so the question is how much new capacity came online in the quarter.
Capital spending and Copilot
Microsoft guided capital spending above $50 billion for the quarter including leases, with consensus at $51.8 billion.
It has framed calendar 2026 capex at roughly $175 billion and guided fiscal 2027 higher again.
Meta's $95 billion equity raise this week showed what staying at the frontier of AI costs.
Microsoft is funding its build from a core business that is still growing operating income at double-digit rates.
Copilot, its AI assistant, is the second debate.
Microsoft moved to per-seat plus usage pricing in September and added a $99 E7 subscription tier in October.
From December it will sell Copilot without a Microsoft 365 base subscription.
The last disclosed figure was 30 million seats, so investors want an update on seats and usage revenue.
The broker view
Yorkville Ives, the US broker led by Dan Ives, calls Microsoft the cleanest proxy for enterprise AI demand and one of its Top 5 Tech Plays into 2027.
It argues that higher capex is demand underwriting the build rather than a margin problem.
Yorkville says last quarter's backlog grew by about $50 billion with none of it from OpenAI or Anthropic.
It points to Anthropic's public IPO filing, which shows $16 billion of revenue in six months, with Claude sold through Azure, as evidence the revenue behind the build-out is real.
The broker keeps its Outperform rating and $615 price target, against a share price of $531.33 in its note.
A clean Azure beat would set the tone for Alphabet, which reports the same evening, and for Amazon on Thursday.
