Can the growth of remote work offset the positions in Microsoft’s unique offerings?

(Reuters) – Investors have increased Microsoft Corp shares nearly 30 percent since the start of the year, betting that the pandemic-induced shift to more remote computing will boost their business.

FILE PHOTO: The Microsoft Store is shown in the Manhattan District of New York, New York, USA, June 26, 2020. REUTERS / Carlo Allegri

Those investors will know if they were right on Wednesday, when the company reports its results for the fiscal fourth quarter.

However, Wall Street is set for Microsoft to report that Azure, its leading cloud computing business, has fallen below 50% revenue growth for the first time.

Analysts are also expecting some declines, such as purchases of Microsoft’s local servers and sales of consumer devices. They also expect Microsoft to take a profit-per-share profit of about 5 cents due to a decision last month to close its retail operations permanently.

But they expect continued increases in demand for products like Azure, which powers online apps and Xbox gaming services, as millions stay home due to the COVID-19 pandemic. Azure’s slow growth, according to analysts, was long expected as business grows to tens of billions of dollars per year.

Investors will also look to see if the company is attracting new customers with its Teams collaboration software, which had 75 million users as of April 29. Last quarter, Microsoft reported strong demand for the product, which it said it delivered to some -hit customers.

Microsoft did not say when it planned to start charging.

Shares of the Redmond, Washington-based company were flirting with a record high of $ 208.75 on Tuesday. They’ve shot up 32.37%, compared to the S&P 500 profit of 0.8% since the start of the year.

Analysts expect the smart cloud business, which includes Azure, to increase nearly 15% to $ 13.1 billion in the fourth quarter, according to IBES data from Refinitiv as of July 21.

“The bottom line is that we are still in the early stages of a market expected to grow to $ 405 billion” by calendar year 2023, Evercore ISA analysts Kirk Materne, Peter Levine and Peter Burkly wrote in a note to investors.

Reports from Subrat Patnaik in Bangalore and Stephen Nellis in San Francisco; Editing by Dan Grebler

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