Microsoft Earnings Preview: Copilot, AI Spending and Margins Are in Focus

Microsoft Corp. (NASDAQ:MSFT) stock was up about 1% on Thursday, outperforming a weak technology sector as investors rotated into large-cap defensive names. The Nasdaq Composite fell 1.35%, while the S&P 500 slipped 0.37%. The Technology sector declined 2.4%.

Recently, several Wall Street analysts updated their outlooks on Microsoft while maintaining bullish ratings ahead of the company’s quarterly earnings later this month.

Analysts Update Price Forecasts

• Evercore ISI analyst Kirk Materne reiterated an Outperform rating and raised his price forecast to $525 from $510.
• Mizuho analyst Gregg Moskowitz maintained an Outperform rating but lowered his price forecast to $490 from $515.
• Citigroup analyst Tyler Radke kept a Buy rating and reduced his price forecast to $570 from $620.
• Wells Fargo analyst Michael Turrin maintained an Overweight rating and lowered his price forecast to $625 from $650.
• BNP Paribas analyst Stefan Slowinski reiterated an Outperform rating and trimmed his price forecast to $549 from $555.

Earnings In Focus

Microsoft is scheduled to report quarterly results on July 29.

Wall Street expects earnings of $4.23 per share, up from $3.65 a year earlier. Revenue is projected to rise to $87.61 billion from $76.44 billion.

BNP Paribas Cuts Price Forecast, Keeps Outperform

BNP Paribas expects Microsoft to deliver another quarter of accelerating cloud growth, forecasting Azure revenue growth of about 41%, ahead of the roughly 40% consensus estimate. It also expects stronger Microsoft 365 Copilot adoption during the seasonally stronger fourth quarter, with potential for 7 million to 8 million new paid seats.

Revenue Growth Seen Accelerating

BNP Paribas expects investors to focus on three key topics during the earnings call: Copilot adoption, initial fiscal 2027 operating margin guidance and Microsoft’s capital spending outlook.

The firm forecasts fiscal 2027 revenue growth of nearly 18%, above the Street’s expectation of about 16.8%, driven by continued Azure momentum and expanding artificial intelligence workloads.

However, it also expects operating margins to contract modestly as depreciation expenses rise alongside Microsoft’s AI infrastructure investments.

BNP Paribas increased its estimate for calendar 2026 cash capital expenditures to $195 billion, citing continued component inflation, and expects even higher spending in fiscal 2027.

AI Leadership Supports Long-Term View

Despite trimming its valuation, BNP Paribas said Microsoft’s leadership across cloud computing, enterprise software and generative AI continues to support a constructive long-term outlook.

The firm believes Azure, Microsoft 365, GitHub, Dynamics, cybersecurity products and the company’s partnership with OpenAI position Microsoft to benefit from sustained enterprise AI adoption.

Price Action

MSFT Stock Price Activity: Microsoft shares were up 1.13% at $400.10 at the time of publication on Thursday, according to Benzinga Pro data.

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