Microsoft is set to kick off the 'Superbowl' of tech earnings this week. Here's the key metric from the tech giant investors should watch for.

• Microsoft's earnings after the bell on Tuesday will kick off the "Superbowl" of mega-cap tech results.
• The key metric for investors to watch, according to Wedbush, is growth in the Azure cloud segment.

Wall Street investors are bracing for mega-cap tech earnings to kick off in earnest this week, starting with Microsoft after the closing bell on Tuesday.

According to Wedbush Securities' Dan Ives, the tech giant is one of two "torch bearers" of the artificial intelligence revolution that's gripped markets, the other being chip maker Nvidia. Wedbush has a 12-month price target of $450 a share, representing upside of 11% from Friday's closing level.

The key metric for investors to keep an eye on will be growth in Microsoft's Azure cloud business. Wall Street's target of 27% growth in the segment is easily beatable, Ives said, as the quarter saw a surge in activity from core Microsoft enterprise product customers moving to the cloud.

"We estimate for every $100 of cloud Azure spend with MSFT the last few years there is an incremental $35-$40 of AI spend for Nadella & Co. looking ahead," Ives said in the note.

Microsoft surged last week to break through the $3 trillion valuation barrier for the first time ever. The milestone makes Microsoft the second company, after Apple, to hit that level.

Ives pointed out that the focus of the earnings call will revolve around customer interaction rates with Microsoft's chatbot Copilot and the outlook for AI use cases on Azure over the next 12-18 months. Ives said he anticipates conservative guidance as the firm embarks on the first leg of a three-year period of AI growth.

"In a nutshell we view this as Microsoft's "iPhone Moment" with AI set to change the cloud growth trajectory in Redmond the next few years," Ives wrote.

Microsoft trimmed its workforce by 1,900 employees across Activision Blizzard, Xbox, and ZeniMax last Thursday, emphasizing the need for a "sustainable cost structure" in a memo.

Microsoft stock was up slightly on Monday, trading at $406.47 per share.