Microsoft Q3 Earnings Preview: Cloud, AI, Guidance Top Items Analysts Highlight To Watch

Technology giant Microsoft Corporation (NASDAQ:MSFT) could be one of the most-watched stocks for the week when the company reports third-quarter financial results after market close Wednesday.

Here are the earnings estimates, a look at what analysts are saying and key items to watch.

Earnings Estimates: Analysts expect Microsoft to report third-quarter revenue of $68.44 billion, up from $61.86 billion in last year's third quarter, according to data from Benzinga Pro.

The company has beaten analyst revenue estimates in eight straight quarters and nine of the last 10 quarters overall.

Analysts expect Microsoft to report third-quarter earnings per share of $3.22, up from $2.94 in last year's third quarter. Microsoft has beaten analyst earnings per share estimates in 10 straight quarters.

What Experts Are Saying: Freedom Capital Markets Chief Global Strategist Jay Woods emphasized the importance of Microsoft's financial results in a weekly newsletter.

"Considering we are dealing with the top market caps in the world, their price impact will move the markets. All but META are in both the Dow and S&P 500 and all four stocks are the top holdings in their specific sector ETFs," Woods said of Meta Platforms, Microsoft, Apple and Amazon.com.

Woods said all four have recently hit bear market territory and have "much room to reverse to get back to old highs."

"MSFT shares are 16% below their highs and flat for the last year. The company continues to spend on AI and investors want to see how this investment is being integrated into their product suite and what impact that will have on revenue."

Woods said another key focus will be on Microsoft's cloud services performance. "Growth with Azure is expected to bolster its cloud operations.”

Wedbush analyst Dan Ives recently highlighted Microsoft as one of several software stocks that could be part of what he called a "security blanket" from the "Category 5" storm that includes trade wars, tariffs and geopolitical uncertainties.

He noted that with the supply chain "visibly clouded," companies with software are a safer bet, with Microsoft being one example. The analyst also said the "AI party is just getting started," with a prediction of $1 trillion in incremental spending for the sector over the next decade helping companies like Microsoft.

Goldman Sachs analyst Kash Rangan was one of several analysts to cut the price target on Microsoft stock ahead of earnings, taking the target from $500 to $400 while reiterating a Buy rating.

The analyst said Microsoft still remains a compelling name in software but is concerned about several potential near-term headwinds.

Rangan is specifically cautious about Microsoft's guidance as there could be "some downside risk" if non-AI growth slows.

KeyBanc Capital analyst Jackson Ader recently downgraded Microsoft stock from “Overweight” to “Sector Weight” with no price target.

The analyst said some durable macro themes could play out during the on-calendar season for Microsoft, with caution in the company's guidance.

While the current quarter was holding up fine, conversations with Microsoft marketing partners indicated concerns for the rest of the year, Ader said.

Key Items to Watch: Cloud and AI are likely to be the most-watched segments in Microsoft's earnings report, along with items to watch for management commentary.

In the second quarter, Microsoft's Intelligent Cloud segment saw revenue increase by 19% year-over-year.

"We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead," Microsoft CEO Satya Nadella said after second-quarter results.

Nadella said Microsoft's AI business had surpassed an annual run rate of $13 billion.

As mentioned by Woods, Microsoft could be one of the most important stocks for the week due to its presence in several top indexes. The stock report could make the SPDR S&P 500 ETF Trust (SPY) and SPDR Dow Jones Industrial Average ETF (NYSE:DIA) ETFs volatile.

Microsoft is the second-largest holding in the SPY at 6.2% of assets and is the third-largest holding in the DIA at 6.0% of assets.

MSFT Price Action: Microsoft stock is up 0.6% to $393.35 on Tuesday versus a 52-week trading range of $344.79 to $468.35. Microsoft stock is down 6.0% year-to-date in 2025 and down 2.2% over the last year.

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