Azure and Office business prospects are optimistic, Bank of America is bullish on Microsoft Corporation (MSFT.US) before its performance.

Microsoft Corporation (MSFT.US) will announce its second quarter earnings after the US stock market closes on January 29th. Bank of America Corp sees an improvement in investor sentiment as the tech giant's Azure and Office businesses show positive signs. Bank of America Corp has given Microsoft Corporation a "buy" rating with a target price of $510. Analyst Brad Sills of Bank of America Corp stated, "We expect healthy growth in revenue for Azure and Office." However, comments from Microsoft Corporation's partners suggest that this quarter's performance is more likely to be "in line with expectations" rather than exceeding them. Sills added, "We expect second quarter revenue to have 0% - 1% upside compared to our expected $68.6 billion (10.1% year-over-year growth at fixed exchange rates), benefiting from stable migration to Azure and continued momentum in the E3/E5 upgrade cycle." Sills expects Azure revenue to grow by 32.5% year-over-year at fixed exchange rates, with artificial intelligence contributing 13 percentage points. Sills also stated that, driven by the "stable" upgrade cycle and the momentum of Copilot development, sales in the company's productivity and business process department, including Office 365, are expected to increase by 11% year-over-year at fixed exchange rates. Sills further mentioned that with the advancement of artificial intelligence, Microsoft Corporation may increase its profit margin expectations for the 2025 fiscal year. Sills said, "As artificial intelligence drives accelerated growth in core business (covering applications and infrastructure) and improvement in profit margin prospects, Azure's return on capital expenditure is steadily rising."