Here’s what to look for in today’s Microsoft earnings report

Today after market close, Microsoft will report its second-quarter earnings. Demand for the company’s Azure AI cloud computing is white-hot, and the company can’t keep up. All eyes will be watching Azure’s revenue growth, which analysts expect to be around 38.4%.

Let’s take a look at some of the other areas worth watching.

Signs of slackening demand for AI?

With gargantuan data centers popping up all over and seemingly insatiable demand for more AI infrastructure, fears of an AI bubble persist. Last month, reports emerged that Microsoft had lowered internal AI growth targets due to weak customer demand. We’ll be looking to hear what CEO Satya Nadella has to say about this.

Cozying up to Anthropic

Over the past quarter, Microsoft has been drawing closer to its partner Anthropic. Yes, Microsoft has a huge $13 billion deal with OpenAI, but recently it has been using Anthropic’s AI tools more in its own products, and Nadella has been encouraging more employees to use AI in their work.

It was recently reported that Microsoft was on track to spend $500 million per year on Anthropic AI services. Microsoft also recently invested another $5 billion in Anthropic, along with Nvidia.

But Microsoft is also reportedly spooked about how well Anthropic’s Claude Cowork tool is able to work with Microsoft’s own apps, eclipsing the performance of its own Copilot 365 tool.

Data centers and capex

Microsoft’s data center build-out got some attention from President Trump, as the company pledged to pay its own way for the electricity it uses and to be a good neighbor. But according to internal documents, The New York Times reports that water usage at the company’s data center has doubled.

Last quarter, Microsoft revised its capex outlook and said it will be spending more in FY 2026 to help catch up on its massive $392 billion backlog of booked computing. Microsoft also recently announced huge investments in AI infrastructure in Canada ($13.7 billion) and India ($17 billion).

Look as well for more info about Microsoft’s custom chips. This week, the company announced that its new second-generation Maia 200 AI chip delivers “30% higher performance than alternatives for the same price.”

Microsoft sits at the center of the sprawling tech world, and has unique visibility on how AI uptake is going in both the consumer and enterprise world. It also sees what AI computing demand looks like on the back end through its popular Azure cloud computing platform serving customers large and small. This quarter’s earnings release should offer some valuable signals about where we are in the AI boom.