$Microsoft (MSFT.US)$ continues big tech earnings tomorrow a...

$Microsoft(MSFT.US)$ continues big tech earnings tomorrow after the close. The two most important topics (in order of importance):

Azure Growth: The Street is looking for 30.2% y/y, compared to 31% in Mar-24, 30% in Dec-23, and 29% in Sep-23. The bottom line is this number needs to be above 30% to continue Azure’s trend of gaining Cloud marketshare.

Here’s what the cloud marketshare race looks like: Last week, $Alphabet-C(GOOG.US)$ posted a slight acceleration in GCP growth, going from 28% in Mar-24 to 29% in Jun-24. The Street is expecting AWS growth of 18% vs. 17% in Mar-24.

CapEx: This year, consensus calls for Microsoft to spend $45B on CapEx, which is up 61% over 2023. This marks the most significant y/y increase in CapEx for any big tech company, compared to $Alphabet-C(GOOG.US)$ up 55%, $Meta Platforms(META.US)$ up 37%, and $Amazon(AMZN.US)$ up 19%. Surprisingly, the Street is expecting $Apple(AAPL.US)$ ’s CapEx to be down 9% as it leverages the OpenAI relationship to build Apple Intelligence.

The reason why CapEx is so important is two-fold. First, it’s a barometer to how much big tech believes in AI. And second, it’s a leading indicator to how well the AI hardware companies will perform over the next 2 years.