Microsoft ’s MSFT second-quarter fiscal 2025 results, scheduled to be reported on Jan. 29, are likely to be driven by steady growth in its cloud platform, Azure. (Read Now: Microsoft Stock Before Q2 Earnings: A Smart Buy or Risky Investment?)

For the fiscal second quarter, Microsoft expects Intelligent Cloud revenues (Azure falls under the segment) between $25.55 billion and $25.85 billion.

Our model estimate for this segment is pegged at $25.69 billion, indicating growth of 19.4% from the figure reported in the year-ago quarter.

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Azure's Cloud Magic to Spark Microsoft's Q2 Growth

Microsoft is witnessing robust demand for its cloud infrastructure monitoring, web-based application performance management and human capital management solutions. This demand is fueled by the increasing migration of workloads to the cloud.

During the fiscal first quarter, Azure and other cloud services revenues grew 33% (up 34% at cc), including roughly 12 points from AI services where demand remained higher than available capacity.

For the fiscal second quarter, Microsoft expects Azure revenue growth at cc between 31% and 32%, with steady contributions from all Azure AI services.

Azure's increased availability in more than 60 announced regions globally is expected to have strengthened the company’s competitive position in the cloud computing market, dominated by Amazon ’s AMZN cloud division, Amazon Web Services and Alphabet GOOGL-owned Google Cloud.

Despite these cutting-edge AI moves, shares of Microsoft have gained 9.7% in the past year compared with the broader Zacks Computer and Technology sector’s 28% growth amid intensifying competition from Amazon and Alphabet as they are all making aggressive moves to expand their generative AI capabilities. Shares of AMZN and GOOGL have returned 48.9% and 31.8%, respectively.

Azure AI Gives MSFT Competitive Edge in Generative AI Market

MSFT’s AI innovation continues to build on its strategic partnership with OpenAI. Azure OpenAI usage has more than doubled over the past six months, as both digital natives like Grammarly and Harvey, as well as established enterprises like Bajaj Finance, Hitachi, KT and LG, move apps from test to production.

GE Aerospace, for example, used Azure OpenAI to build a new digital assistant for all 52,000 of its employees. In just three months, it has been used to conduct over 500,000 internal queries and process more than 200,000 documents.

In the fiscal first quarter, Microsoft added support for OpenAI’s newest model family o1. MSFT is also bringing industry-specific models to Azure AI, including a collection of best-in-class multimodal models for medical imaging.

Microsoft has brought generative AI to Power Platform to help customers use the low-code/no-code tools to cut costs and development time. As of Sept. 30, nearly 600,000 organizations have used AI-powered capabilities in Power Platform, up 4X year over year.