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UPDATE: Microsoft revenue rises 14% to $36.9B, profits exceed estimates, cloud rises and games fall

It’s that time of year again: Big tech earnings season.

The action kicked off with Apple posting a record quarter yesterday, and today, fellow $1 trillion club member Microsoft is set to report its latest financials. The tech giant has been riding high thanks to its cloud division, which managed a major upset in winning the coveted JEDI cloud contract over rival Amazon in the quarter.

Analysts expect Microsoft to post earnings of $1.32 per share on revenue of $35.67 billion in the second quarter of its fiscal year. That’s an increase of 9.75 percent over the same time last year.

Microsoft stock is up 61 percent over the last year, well ahead of the larger S&P 500 index that has risen 24 percent in that time frame.

Results from the nation’s biggest tech companies have become more important to the stock market as their value has risen. CNBC noted this week that the five biggest tech giants — Microsoft, Amazon, Apple, Facebook and Google — now make up a whopping 17.5 percent of the S&P 500. That a tech company would reach a $1 trillion market cap was a headline-grabbing prediction as recently as a couple years ago, but now both Apple and Microsoft are comfortably over that threshold with Amazon and Google knocking on the door.

Beyond the major numbers, here are a few things we’ll be watching when Microsoft reports its financials later today:

Will cloud be king again? In July, Microsoft’s main cloud unit surpassed each of the tech giant’s other major divisions in revenue for the first time. The following quarter, the Intelligent Cloud division trailed the other two main wings of the company: Productivity and Business Processes and More Personal Computing. Will the cloud division become the company’s leading revenue driver going forward, or was it a one-time thing? And as always, we’re wondering if Microsoft will finally break out Azure revenue this quarter (not likely).

Return of the JEDI: Microsoft in November beat out heavy favorite Amazon for the coveted 10-year, $10 billion contract to rebuild the Pentagon’s tech infrastructure. Amazon challenged the decision and is trying to get the court to bar Microsoft from working on the project until the lawsuit plays out.

Microsoft has reportedly begun hiring for the massive project. Will executives have anything to say about the project or Amazon’s lawsuit that seeks to reopen the process?

Hardware reinforcements on the way: Microsoft announced some major hardware products this quarter that could give a boost to the company’s Surface and gaming divisions. Microsoft promised the next-generation Xbox will be the “fastest, most powerful console ever,” while the Surface Duo and Neo devices put the tech giant on the cutting edge of the foldable gadget trend.

But those won’t come out until later this year. Microsoft in October launched the trail of its Project xCloud game streaming service, which aims to build a broader global gaming audience that goes beyond the console. The Surface team unveiled several new and updated gadgets in October that made their debut in time for the 2019 holiday season.

Here are a few of the other highlights from the quarter:

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