Microsoft will report its earnings for the third quarter of the fiscal year after the stock market closes on Wednesday. Analysts have predicted that revenue would grow by 10.6% year-over-year to $68.4bn, even as the company plows tens of billions into artificial intelligence as well as earnings-per-share of $3.22. The company has beaten Wall Street’s expectations on each of its previous three quarterly earnings reports.

Analysts said they view the earnings report as a temperature check on Microsoft’s artificial intelligence business, which has announced it will invest around $80bn in this fiscal year alone, though it has also terminated some data center leases in recent months. The company has invested billions in OpenAI in recent years, giving it a large stake in the ChatGPT developer.

All in on AI

Microsoft’s heavy bets on AI, which extend to deals with companies beyond OpenAI, has led to Microsoft and its investors being reliant on the technology’s success and widespread adoption. Microsoft has, meanwhile, framed its investments in AI as putting it at the forefront of a world-changing technology it claims is crucial to the future of American industry.

“Not since the invention of electricity has the United States had the opportunity it has today to harness new technology to invigorate the nation’s economy,” Smith claimed in a January blogpost. “In many ways, artificial intelligence is the electricity of our age.”

Microsoft executives have also been heavily touting an AI-driven future in recent appearances. Nadella claimed earlier this week that 20% to 30% of the company’s code was written by AI, although did not give specifics on how that number was calculated. Chief technology officer Kevin Scott, meanwhile, predicted on a podcast this month that 95% of code would be AI-generated within the next five years.

Last quarter, Microsoft reported a 12% increase in revenue and touted growth in its AI business – which it reported saw an increase of 175% year over year.

Investors have also been keeping an eye on how Microsoft’s Azure cloud computing service is performing after a fall in revenue last quarter. The company has been seeking to expand Azure throughout Europe, with President Brad Smith also promising Microsoft will expand its European data centers by 40% over the next two years.

Trump’s trade policies bring uncertainty to tech

Earlier in the day, Microsoft president Brad Smith said Microsoft would sue to overturn any command to cease operations in the European Union. The remark comes as Donald Trump’s trade policies ratchet up tension between the US and EU.

“In the unlikely event we are ever ordered by any government anywhere in the world to suspend or cease cloud operations in Europe, we are committing that Microsoft will promptly and vigorously contest such a measure using all legal avenues available, including by pursuing litigation in court,” he said at a European tech conference.

Several of the world’s largest tech companies, including Amazon, Meta and Apple, are all reporting quarterly earnings this week in what will be a bellwether of how the industry is navigating the larger economic downturn and Trump administration tariffs. Tesla, the world’s most valuable automaker, also released its worse-than-expected earnings last week, which revealed the company had suffered a 71% loss in profits compared with the previous year amid a backlash against Elon Musk.

While other tech giants such as Apple and Amazon are exposed to heavy financial risks related to the Trump administration’s erratic tariff policies, Microsoft has been relatively insulated, given that its products and services are less dependent on trade.

Shares in Microsoft have fallen around 7% overall since January, a downturn in part caused by wider economic instability as well as China-based developers closing the gap in AI. The release in January of the DeepSeek AI app, a chatbot similar to OpenAI’s ChatGPT, caused a rapid selloff in Microsoft shares. Microsoft has since integrated DeepSeek’s technology into some of its products.