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Microsoft (MSFT) is scheduled to report results of the fourth quarter of its fiscal year 2024 after the market close on Tuesday, July 30, with a conference call scheduled for 5:30 pm ET. What to watch for:

CLOUD: In its fiscal third quarter, the company reported earnings and revenue that both beat consensus forecasts.

"Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry," said Satya Nadella, chairman and CEO of Microsoft.

"This quarter Microsoft Cloud revenue was $35.1B, up 23% year-over-year, driven by strong execution by our sales teams and partners," added CFO Amy Hood.

On the day after the company's last report, Citi raised the firm's price target on Microsoft to $495 from $475 and kept a Buy rating on the shares. Microsoft offered a "reassuring print" for software with a strong beat as Azure meaningfully accelerated, further extending market share gains, the analyst told investors. The firm added that the company's Q4 guidance and fiscal 2025 early look were "both conservative and constrain significant positive estimate revisions," though it believed investors were walking away from the fiscal Q3 report with more conviction in Microsoft's long-term growth prospects and profitability execution.

More recently, on June 21, Citi raised the firm's price target on Microsoft to $520 from $495 with an unchanged Buy rating on the shares. While OpenAI's revenue growth headlines are a positive for Microsoft from a growth perspective, suggesting strength in Azure, consensus models may be understating the losses that Microsoft will incur from its OpenAI stake in the non-operating expense line, the analyst told investors in a preview note. Citi believes consensus earnings per share estimates may be overstated by 4c-5c in the coming quarters all-else-equal. However, the firm increased fiscal 2027 estimates, which drives the price target bump.

On July 23, Piper Sandler raised the firm's price target on Microsoft to $485 from $465 and kept an Overweight rating on the shares. It took 13 years for Microsoft Cloud services to cross over the $100B revenue milestone, and the next $100B in cloud revenue could be added in just three years, the analyst tells investors. The firm says growth investors should look beyond near-term fears of an artificial intelligence overbuild "with the lens of a broader cloud transformation still underway" that could help sustain double-digit sales and earnings growth through 2030. Microsoft's cloud mix aided by AI could expand to 63% by fiscal 2026, from 53% today and 10% in 2026, according to Piper. It thinks data center capital expenditures will support a potential doubling of Microsoft Cloud revenue to $200B-plus exiting fiscal 2026.

CROWDSTRIKE OUTAGE: On July 19, George Kurtz, the CEO of CrowdStrike (CRWD), said via X, the platform formerly known as Twitter: "CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts. Mac and Linux hosts are not impacted. This is not a security incident or cyberattack. The issue has been identified, isolated and a fix has been deployed. We refer customers to the support portal for the latest updates and will continue to provide complete and continuous updates on our website. We further recommend organizations ensure they're communicating with CrowdStrike representatives through official channels. Our team is fully mobilized to ensure the security and stability of CrowdStrike customers."

Microsoft (MSFT) CEO Satya Nadella said in his own post on X: "Yesterday, CrowdStrike (CRWD) released an update that began impacting IT systems globally. We are aware of this issue and are working closely with CrowdStrike and across the industry to provide customers technical guidance and support to safely bring their systems back online."

In a blog post on July 21, Microsoft said that it estimated at that time that Crowdstrike's update affected 8.5M Windows devices, "or less than one percent of all Windows machines." "While the percentage was small, the broad economic and societal impacts reflect the use of CrowdStrike by enterprises that run many critical services. This incident demonstrates the interconnected nature of our broad ecosystem - global cloud providers, software platforms, security vendors and other software vendors, and customers. It's also a reminder of how important it is for all of us across the tech ecosystem to prioritize operating with safe deployment and disaster recovery using the mechanisms that exist," the company said.

Citi analyst Tyler Radke noted that Microsoft shares fell less than 1% on the Friday when the widespread outage brought significant impacts to business operations around the globe. There were also a separate -- more minor -- outage to Azure U.S. Central Region, which impacted some O365 apps that has since been resolved. Overall, the firm sees limited financial impacts to Microsoft, though it also notes the company may still have to deal with negative perception around perceived vulnerabilities to its Operating System, with public hearings in the coming days and additional investigation by the FTC. While difficult to handicap potential share loss from Crowdstrike, Microsoft's security business is a theoretical beneficiary, added Citi.

ANTITRUST: Throughout the quarter, antitrust reports focused on Microsoft included:

• EU charges Microsoft with antitrust violations over Teams bundling practices
• EU exploring antitrust probe into Microsoft, OpenAI partnership, FT reports
• Microsoft settles antitrust dispute with CISPE, Reuters reports

EXPECTATIONS: Current consensus EPS and revenue forecasts for Microsoft's June-end quarter stand at $2.93 and $64.36B, respectively, according to data provided by LSEG Data and Analytics.

Among analysts tracked by Bloomberg that have updated their views on Microsoft within the last twelve months, 65 have Buy or equivalent ratings, 5 have Hold or equivalent ratings and the average twelve-month price target of 46 of those analysts is $502.40.

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