Microsoft delivered results that exceeded Wall Street’s expectations for the second quarter, prompting a positive reaction from the market. Management attributed the quarter’s outperformance to accelerating demand for Azure cloud services, rapid adoption of Copilot AI features across commercial and consumer products, and momentum in large contract renewals. CEO Satya Nadella highlighted that new customer migrations, scaling of cloud-native apps, and growth in AI workloads all contributed to the strong performance. CFO Amy Hood pointed to robust execution by sales and partner teams as key to surpassing internal and external forecasts.

Is now the time to buy MSFT? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Microsoft’s Q2 Earnings Call

• Keith Weiss (Morgan Stanley) asked about the risk of large AI customers becoming future competitors. CEO Satya Nadella responded that supporting leading AI workloads helps Microsoft learn and optimize its platform, and broad adoption across many customers reduces dependency on any single player.
• Mark Moerdler (Bernstein Research) inquired about how AI will be monetized across SaaS and agent-based applications. Nadella said monetization models are evolving, blending per-user and consumption-based pricing, while CFO Amy Hood noted that different tiers and usage throttling will remain prevalent.
• Karl Keirstead (UBS) asked about the durability of the recent acceleration in on-premises to Azure migrations. Nadella identified healthy ongoing migrations, increasing cloud-native workloads, and new AI use cases as the three main drivers, and believes the trend is far from mature.
• Kash Rangan (Goldman Sachs) questioned the trajectory of capital expenditures and their impact on Azure growth. Hood emphasized that CapEx is tied to a substantial backlog and that demand is still outpacing supply, with ongoing investments justified by strong ROI.
• Michael Turrin (Wells Fargo) sought more detail on margin management as AI offerings grow. Hood explained that durable revenue growth and software-driven efficiencies are key to maintaining margins, even as the business mix evolves.

Catalysts in Upcoming Quarters

In the coming quarters, our team will be monitoring (1) the pace at which Microsoft adds new data center capacity and alleviates supply constraints for cloud and AI services, (2) continued adoption and monetization of Copilot and AI-powered business applications, and (3) the durability of large-scale customer migrations to Azure. Execution on efficiency initiatives and updates on the gaming and consumer platforms will also be important to track.

Microsoft currently trades at $530.91, up from $514.04 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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