Other than the cloud, look for this on Microsoft earnings

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Shannon Stapleton | Reuters

Investors will once again zero in on Microsoft's cloud business when dissecting the tech giant's latest earnings report, but they will also keep an eye out for two other factors: PC sales and expenses.

The company is scheduled to report fiscal second-quarter results after the bell Thursday, with Wall Street expecting earnings per share of 71 cents on revenue of $25.263 billion, according to a Thompson Reuters consensus estimate.

Last quarter, the company beat estimates on both lines, posting earnings per share of 67 cents on revenue of $21.66 billion.

Microsoft has been transitioning from a primarily PC-based company into a cloud-based one, incorporating products such as Azure and Office 365 into its commercial and enterprise business.

PC sales have been slipping across the board for years, and global personal computer shipments fell 10.6 percent in the quarter year over year, according to research firm IDC. Gartner, another research firm, put the decline at 8.3 percent.

Katherine Egbert, senior research analyst at Piper Jaffray, said in a Jan. 15 note the weak PC sales number led to her trim her revenue forecast. She also cited a "faster-than-expected deceleration in global PC shipments" as a risk.

But she also said Microsoft's cloud business, the world's second largest after Amazon Web Services, could offset PC weakness.

"The cloud business is sort of becoming a duopoly between AWS and Azure," she told CNBC. Egbert estimates that Azure's revenue has grown 125 percent year over year for the December quarter.

"Azure is their first significant new product," she said. "That's what's exiting about the story."

However, Keith Weiss, equity analyst at Morgan Stanley, told CNBC that "the real concern is that Azure growth is going to come at the expense of (server and tools data center businesses)."

Operating expenditures will also be in focus for Microsoft, as the company attempts to maintain its stellar efficiency, she said, adding that Microsoft's expenses have come in below the low end of their guidance for the past seven quarters.

"They've done a nice job in opex," she said. "But it's unusual for companies to maintain [strong] opex performance for a long period of time. You're essentially making cuts on top of cuts."

However, Morgan Stanley's Weiss also said he remains optimistic about Microsoft's earnings. "This is the year they come back to earnings growth," he said.

Two of the company's main growth drivers will include its cloud business and operating margin expansion, Weiss said in a Jan. 13 note.

— Reuters contributed to this report.

DISCLOSURES: Morgan Stanley makes a market on Microsoft.

This story has been updated to reflect a slightly different earnings consensus.