Even if Microsoft reports fiscal first quarter earnings that beat analyst expectations, that might not be enough to prevent some investors from selling the stock if its cloud business results disappoint, said Pacific Crest analyst Brent Bracelin.
Analysts expect Microsoft to report earnings per share of 68 cents on revenue of $21.7 billion, according to estimates compiled by Thomson Reuters. If Microsoft's quarterly revenue delivers on that expectation, this would stop a revenue slide that dates back five quarters.
But the focus for investors on Thursday will be how effectively Microsoft CEO Satya Nadella is driving the technology giant towards a future of growth via its cloud-based software and services, Office 365 and Microsoft Azure. Microsoft's stock is trading up around 3.8 percent so far this year. The S&P 500 is up around 5 percent.
"We think of Office 365 and we think of Azure as really being the two most important growth drivers to the business," RBC Capital Markets' analyst Ross MacMillan.