As Microsoft Corp. (NASDAQ:MSFT) prepares to release its first quarter earnings on Oct. 30, the tech giant's AI and cloud services will be in the spotlight. Analysts estimate earnings per share at $3.09 and revenue of $64.48 billion.

Microsoft stock is up 24.67% over the past year, 14.52% YTD. Investors will be keen to see if Microsoft’s focus on AI and cloud can offset growing concerns over its high capital expenditures (CapEx).

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Can Q1 Earnings Drive Microsoft's Stock Higher?

As first quarter earnings approach, Microsoft's ability to turn its CapEx investments into tangible growth will be scrutinized. While Azure's rapid expansion continues, Microsoft’s management will need to address how these investments in AI and cloud are paying off, especially in the face of economic uncertainty and potential regulatory scrutiny.

Microsoft Stock Chart Shows Bullish Momentum

The stock might continue its streak as the charts remain bullish.

Chart created using Benzinga Pro

Microsoft stock at $424.73 is trading above the eight-day, 20-day and 50-day exponential moving averages, signaling ongoing buying pressure.

The Moving Average Convergence Divergence (MACD) indicator sits at 0.17, suggesting a continued upward trend. However, with an RSI of 55.05 and rising, Microsoft stock could soon be approaching overbought territory, which could signal potential near-term volatility.

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Betting Big On AI, Cloud Amid CapEx Concerns

In the fourth quarter, Microsoft's Intelligent Cloud business posted a 19% revenue increase, driven by Azure's 29% growth, with AI services playing a crucial role. As the company ramps up investments in data centers and AI infrastructure to meet demand, investors are questioning whether these hefty CapEx expenses will deliver returns soon enough to sustain Microsoft’s stock momentum.

Microsoft’s bet on AI is substantial — management projects a $3.50 return for every $1 invested in AI. With generative AI revenues expected to surge from $5.3 billion in 2024 to $35 billion by 2027, the company is positioning itself as a leader in the AI-driven cloud market.