Microsoft Azure Still Poised To Crush Estimates Despite $150 Billion Spending Fears: Analyst

BNP Paribas analyst Stefan Slowinski said Microsoft Corp (NASDAQ:MSFT) faces a complex setup in its fiscal third-quarter results, balancing strong cloud growth with investor concerns around AI capacity allocation and spending.

GPU Allocation And Copilot In Focus

Slowinski said on Thursday that investors are increasingly scrutinizing how Microsoft allocates constrained GPU capacity across internal initiatives and external customers, including AI model development.

He added that management may offer updates on Copilot adoption and upcoming feature improvements to address these concerns, especially as competitors like Anthropic scale rapidly.

Azure Growth Holds Up Amid Mixed Signals

Slowinski projected Azure growth of about 39% in constant currency for the fiscal third quarter, slightly above consensus, alongside mid-teens growth for Microsoft 365 Commercial Cloud.

He noted that reseller survey data showed slightly softer performance than earlier in the year, though it was still stronger than most peers’.

He flagged a potential pull-forward in Windows revenue driven by higher memory costs.

Lower Price Target On Higher Capex Outlook

Slowinski cut his price forecast to $556 from $659 while maintaining an Outperform rating, reflecting a broader software valuation reset.

He said updated assumptions include a higher share of capacity allocated to first-party workloads and increased capital expenditures, with spending expected to reach around $150 billion in fiscal 2027.

Technical Analysis

At $370.22, Microsoft is trading 2% below its 20-day simple moving average (SMA), the stock’s average price over the last 20 sessions, suggesting short-term trend pressure is still down. It’s also 15.2% below its 100-day SMA, indicating the intermediate trend remains tilted toward sellers.

The moving average convergence divergence (MACD), a trend/momentum measure, shows -8.7597 versus a -10.2024 signal line, and that “MACD above signal” setup suggests downside momentum is easing even if the trend is still weak. The death cross in January (50-day SMA below the 200-day SMA) reinforces the longer-term bearish structure, so bulls typically need sustained follow-through to change the trend.

Over the last 12 months, the stock has been down 2.69%, a backward-looking read that fits with the idea of a choppy-to-lower regime. Price is also sitting much closer to the $353.10 52-week low than to the $555.45 high, consistent with cautious positioning and lower expectations.

• Key Resistance: $413.00 — a prior ceiling where rebounds have struggled to extend.
• Key Support: $356.00 — an area where buyers have recently shown up to slow declines.

Earnings & Analyst Outlook

Following last quarter’s results, investors are now tracking the path toward the next reporting date on April 29, 2026 (confirmed).

• EPS Estimate: $4.07 (Up from $3.46 YoY)
• Revenue Estimate: $81.38 Billion (Up from $70.07 Billion YoY)
• Valuation: P/E of 23.3x (Suggests fair valuation relative to peers)

Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $595.79. Recent analyst moves include:

• UBS: Buy (Lowers Target to $510.00) (March 25)
• B of A Securities: Buy (Target $500.00) (March 24)
• Stifel: Downgraded to Hold (Lowers Target to $392.00) (February 5)

Top ETF Exposure

• iShares S&P 500 Growth ETF (NYSE:IVW): 9.48% Weight
• State Street SPDR Portfolio S&P 500 Growth ETF (NYSE:SPYG): 9.60% Weight
• iShares Core S&P US Growth ETF (NASDAQ:IUSG): 9.55% Weight

Significance: Because MSFT carries such a heavy weight in these funds, any significant inflows or outflows will likely trigger automatic buying or selling of the stock.

MSFT Price Action: Microsoft shares were down 0.64% at $370.70 at the time of publication on Friday, according to Benzinga Pro data.

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