Microsoft Stock Is Down More Than 10% In 3 Months. Time to Buy the Dip?

• The bundle giant's "Azure and different unreality services" gross grew 40% past quarter, with request exceeding supply.

• Microsoft's commercialized backlog soared, driven chiefly by Azure commitments.

• Capital expenditures were $34.9 cardinal past quarter, and absorption said spending volition emergence sequentially.

• 10 stocks we similar amended than Microsoft ›

It's a timely infinitesimal to look astatine Microsoft (NASDAQ: MSFT) stock. Not lone is it down much than 10% successful 3 months, but it reports fiscal second-quarter results aft marketplace adjacent connected Wednesday.

Going into the report, we cognize request is surging for the company's cloud-computing business, Azure. So this portion of the bundle giant's concern should study different spectacular quarter. But we person little clarity astir however rapidly the company's superior expenditures volition turn and whether its backlog volition proceed to grow astatine the bonzer complaint it was successful fiscal Q1.

While we'll person to hold until the update to get clarity connected these items, bash we person capable accusation successful the meantime to cognize whether the banal is simply a bargain now? Or is waiting for much accusation from the net study earlier making a determination the amended move?

As is the lawsuit for galore tech companies during the AI (artificial intelligence) roar we find ourselves successful today, the communicative astatine Microsoft close present is each astir its unreality business, Azure. Demand for AI-capable unreality computing astatine Azure helped the company's "Azure and different unreality services" gross soar 40% twelvemonth implicit twelvemonth successful fiscal Q1.

And Azure commitments are showing up successful the company's commercialized backlog, too.

"Our commercialized [remaining show obligations (RPO)] accrued implicit 50% to astir $400 billion," said Microsoft CEO Satya Nadella successful the company's fiscal first-quarter net call.

Microsoft's soaring RPOs, oregon the contracted gross that it hasn't recognized arsenic gross yet, item its customers' unthinkable appetite for unreality computing arsenic enterprises integrate much AI into their businesses.

With request similar this, Microsoft's Azure maturation volition apt beryllium beardown successful fiscal Q2. But the bigger question volition beryllium whether RPOs are inactive trending arsenic sharply higher arsenic they were successful fiscal Q1. Any important deceleration successful this metric could spook investors.

Notably, Microsoft main fiscal serviceman Amy Hood said successful the company's net telephone that Azure request again exceeded proviso crossed workloads, and she guided for Azure gross maturation of astir 37% successful changeless currency for fiscal Q2, noting that Microsoft expects to stay capacity-constrained done astatine slightest the extremity of its fiscal year.