Microsoft will report its fiscal fourth-quarter earnings after the bell on Wednesday, with investors keenly focused on whether the company's massive artificial intelligence investments are beginning to pay off. The stock has declined about 19% so far in 2026, underperforming rivals Amazon and Google.
Options pricing suggests Microsoft shares could move up to 6% in either direction by week's end, according to one estimate, while another analyst pegs the implied move at about 6.6%. Over the last 12 earnings cycles, Microsoft has averaged a 4.8% implied move and a 4.4% actual move.
Azure Growth and Capex in Focus
Azure cloud revenue is expected to grow 40% to 40.2% on a constant-currency basis, according to analysts polled by CNBC and StreetAccount. Microsoft's Intelligent Cloud segment is projected to bring in $38.1 billion, though the company guided for $37.95 billion to $38.25 billion, creating a debate between those expecting 12% growth and others projecting up to 28% growth. Remaining performance obligations, a key forward-looking metric, are expected to climb 72% to $647.6 billion.
Microsoft is expected to report capital expenditures of about $42 billion for the quarter, according to Bank of America, up 32% from the prior quarter and 74% from a year earlier. The broader market is watching spending closely after Alphabet's capital expenditure announcement last week sent its stock tumbling more than 6%. Alphabet said it plans to spend between $195 billion and $205 billion on capex this year, exceeding analyst expectations.
BofA Global Research's Tal Liani wrote that Microsoft must show Azure cloud growth of 39% to 40% or better to calm spending-related jitters. UBS raised its fiscal 2027 capital expenditure estimate for Microsoft to $261 billion, while analysts expect the company to spend $190.5 billion in calendar 2026. Microsoft has acknowledged it is capacity-constrained, making it unable to meet demand for its AI services, and expects constraints to persist through at least the end of 2026.
Earnings Expectations
Microsoft is expected to post earnings per share of about $4.24 to $4.25 on revenue of roughly $87.7 billion, up from $3.65 and $76.4 billion in the same quarter last year. Revenue growth is forecast at 14.6% to 15.4% year-over-year. The Business Productivity and Business Processes segment is seen at $37.3 billion, up 12.5%, while More Personal Computing is expected to decline 9.5% to $12.1 billion.
Deutsche Bank analysts recommend buying Microsoft stock, noting investors will watch for updates on hardware prices, AI investments, and backlog concentration. UBS believes the set-up mitigates downside risk even if AI capex rises. Eleven of 12 analysts rate Microsoft as 'buy', with a mean price target of $549.