Microsoft Q1 results likely to show continued PC weakness, but cloud strength: Wedbush
Jean-Luc Ichard

Microsoft (NASDAQ:MSFT) is slated to report fiscal first-quarter results after the close on Tuesday and while a lot of attention will be paid to its Azure cloud growth, investors are also keen to hear just how weak the PC market has become, investment firm Wedbush Securities said.
Analyst Dan Ives, who has an outperform rating on Microsoft (MSFT), noted that it is "dark days" for the PC market, given negative data points from companies such as Advanced Micro Devices (AMD), which pre-announced third-quarter results earlier this month due to continued PC weakness, as well as Intel (INTC). 
"Personal Computing was guided to be between $13.00 billion and $13.40 billion with the Street currently at $13.22 billion estimate," Ives wrote in a note to clients, adding that the weakness seen from AMD (AMD) and Intel (INTC) "will clearly be a headwind for Microsoft in the quarter." 
However, the analyst added that this situation is "well understood by the Street," making Azure and cloud computing growth all the more important for Microsoft (MSFT) and investors.
Despite some concerns that the cloud and data center markets have started to slow, Ives noted that Azure growth, forecast to come in at 43%, has held up "relatively well" in recent months. Despite that, the analyst conceded there have been some "soft spots" for the cloud, particularly in Europe and small and medium-sized businesses. 
"Given the macro backdrop for global enterprise and cloud spending, the Street will be watching this report/guidance closely to determine if demand in Redmond has remained healthy for cloud spending given the gloomier background surrounding the Microsoft story," Ives explained.
Nonetheless, cloud strength is expected to aid Microsoft (MSFT) with Wedbush expecting it to top estimated, especially as the Redmond, Washington-based Microsoft (MSFT) is aggressive on cost cutting moves. 
A consensus of analyst estimates expect Microsoft (MSFT) to generate $49.7B in revenue and earnings of $2.31 per share.
Earlier this month, Microsoft (MSFT) expanded its cloud deal with investment firm UBS for a further five years.