Investors will be listening on the call to see what Nadella says about Microsoft's key areas of business including its Windows franchise, its cloud business and the company's mobile strategy. But the CEO will be given a "get out of jail free card" when it comes to next quarter guidance because investors expect it to take some time for Nadella to fully implement his new strategies, Ives said.
"We're not expecting any home runs from the quarter," Ives, who has a 'market perform' rating on the stock with a price target of $40, said. "The biggest surprise would be if there was an uptick in the Windows franchise."
The deteriorating PC market has weighed heavily on Microsoft's Windows business. But recent data from IDC shows that PC shipments are moderating, which means declining Windows sales may have finally hit a bottom.
"There's starting to be some light at the end of the tunnel and the light doesn't seem like a train anymore (now)," Ives said. "The fundamentals are definitely more positive for Microsoft in terms of the direction they are going."
As for Azure, Microsoft's cloud business, analysts expect to see continued strong growth despite competition from companies such as Google and Amazon. The company's cloud-computing unit has been experiencing triple digit growth year over year in recent quarters and investors will be looking for the same kind of growth when it reports Thursday.
Besides its cloud business, mobile is another key component of Nadella's strategy and investors are anxious to see what he has up his sleeve. Under Nadella, Microsoft already has rolled out its Office for iPad and made Windows free for some mobile devices, which show the company is taking a new approach to mobile.
Read MoreMicrosoft unveils Office for Apple's iPad