Microsoft (MSFT) official guidance

In the second half of the fiscal year, we currently expect CapEx spend to accelerate primarily from CPUs, inclusive of higher memory and storage costs, and GPUs, as well as the 3P capacity deliveries that shifted to H2.

Therefore, for the calendar year, spend should be approximately $170 billion due to the 3P capacity delays noted earlier.

In Q2, we expect CapEx spend will be over $50 billion.

In commercial bookings, we expect healthy growth in our commercial sales motions, though results will be impacted by the significant Azure commitments signed in the prior year.

We expect COGS of $32.7 billion to $32.9 billion, or growth of 26%-27%, and operating expense of $18.5 billion to $18.6 billion, or growth of 9%, driven by continued investment in R&D, compute capacity, and talent.

We expect our Q2 effective tax rate to be approximately 20%.

Given our strong business performance, we expect to continue to remain free cash flow positive in FY27.

Microsoft Cloud gross margin percentage should be roughly 65%, down year over year, as continued improvement in product-level margins is more than offset by sales mix shift to Azure.

We expect COGS of $32.7 billion to $32.9 billion, or growth of 26%-27%, and operating expense of $18.5 billion to $18.6 billion, or growth of 9%, driven by continued investment in R&D, compute capacity, and talent.

Operating margins should be down slightly year over year.

Excluding any impact from our investments in OpenAI, other income expense is expected to be roughly negative $300 million, as interest income will be more than offset by interest expense, which includes the interest payments related to data center finance leases.

We expect revenue from Agents and Infra of $80.1 billion to $80.7 billion, or growth of 24% to 25%.

In Devices and Consumer, we expect revenue to be $15.9 billion to $16.4 billion.

Therefore, at a total company level, revenue should be between $96 billion and $97.1 billion, or growth of 18%-19%.

In Frontier and Support Services, we expect revenue to grow in the low to mid single digits.

Hardware revenue in Q2 should decline year over year.

In Industry Solutions Cloud, we expect revenue growth to be in the mid to high single digits, with continued impact from the bookings trends noted earlier.

M365 Consumer Cloud revenue should grow in the low teens, down sequentially as we lap the price impact noted earlier.

Productivity and Server Licensing revenue should decline in the mid to high single digits, down sequentially due to a lower expected mix of contracts that carry higher in-period revenue recognition.

Search and advertising revenue ex TAC growth should be in the low double digits, driven by consistent trends in rate and volume, with overall search and advertising revenue expected to grow at a similar rate.