Setting the Stage Meta Platforms (NASDAQ:META | META Price Prediction) and Microsoft (NASDAQ:MSFT) report quarterly earnings after the bell Wednesday, July 29, followed by Amazon (NASDAQ:AMZN) on Thursday, July 30. The AI trade looks tired, and shorts are leaning in hard.
Shorts Bet Against the Capex Bill Bearish positioning has surged as traders wager these hyperscalers will lift full-year AI spending yet again. Google parent Alphabet soundly beat earnings, but its shares tanked the next day after the company raised its 2026 capex guide to $195 billion to $200 billion. The spending spigot remains wide open, and that reaction now hangs over the entire group.
The setup rhymes with prior peaks. Short interest in Meta peaked in fall 2022, right before its historic rally, and Amazon shorts loaded up in late 2023 ahead of a massive 2024 run. Yet Meta’s 0.58 full-chain put/call ratio and Amazon’s 0.32 reading show calls still outnumbering puts across the options chain, complicating the bearish setup.
Consensus Expectations Ticker Beat Odds FY26 Capex Guide Last Qtr Surprise META 90.2% $125B to $145B 56.79% AMZN 95.5% ~$200B 60.69% MSFT 91.5% Q3 capex $30.88B (+84% YoY) 4.9% Based on the tape, a beat is nearly priced in across all three. That leaves capex commentary and forward cloud growth as the swing variables.
What I’m Watching Meta: I’ll be watching whether Mark Zuckerberg pushes the $125B to $145B capex range higher and how Reality Labs’ $4.03B operating loss trends. Ad price growth of +12% and impressions +19% last quarter set a high bar.
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Amazon: Focus on AWS holding its 28% pace, the fastest in 15 quarters, and whether Andy Jassy quantifies the OpenAI Trainium and Anthropic deals. Prediction markets assign 92.5% odds capex clears $200B.
Microsoft: Azure constant-currency growth is the number. Traders put 53.5% odds on the 40% to 42% band. The $627 billion commercial RPO and $37 billion AI revenue run rate, up 123% year over year, anchor the bull case.
Why It Matters Combined, these three anchor roughly a quarter of S&P 500 capex. If guides move higher again, the shorts may get the first move. If demand commentary keeps outrunning supply, the 2022 and 2023 pattern of squeeze-fueled rallies becomes the reference case, and the bulls have it. Meta’s Q1 2026 beat still produced an 8.55% earnings-day decline, a reminder that the beat is now table stakes.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.
LOS ANGELES, July 28, 2026 (GLOBE NEWSWIRE) -- The Portnoy Law Firm advises Microsoft Corporation, (“Microsoft” or the "Company") (NASDAQ: MSFT) investors of a class action on behalf of investors that bought securities between May 1, 2025 and January 28, 2026, inclusive (the “Class Period”). Microsoft investors have until August 11, 2026 to file a lead plaintiff motion.
Investors are encouraged to contact attorney Lesley F. Portnoy, by phone 310-692-8883 or email: [email protected], to discuss their legal rights, or join the case via https://portnoylaw.com/microsoft-corporation. The Portnoy Law Firm can provide a complimentary case evaluation and discuss investors’ options for pursuing claims to recover their losses.
Microsoft is a multinational technology company that develops software, cloud services, and devices. In recent years, Microsoft’s cloud computing platform named Azure has been Microsoft’s main growth driver. A key reason for Azure’s recent growth is Microsoft’s multi-billion-dollar investment into AI, including the development of its own generative AI chatbot named Copilot.
According to the complaint, during the relevant period, Microsoft consistently touted Copilot’s best-in-class capabilities, which purportedly drove widespread and growing user adoption. Copilot’s apparent success allowed Microsoft to report surging Azure-related revenue.
As alleged, in truth, Copilot suffered from severe functionality issues that caused user adoption to decline and put Microsoft’s Azure revenue at risk.
On January 28, 2026, Microsoft announced disappointing 2Q 2026 financial results and that Azure growth had slowed suddenly. Microsoft also allegedly revealed for the first time that the number of Microsoft 365 Copilot premium customers totaled only 15 million, materially below analyst estimates.
This news caused the price of Microsoft common stock to decline $48.13 per share, or 10%, from $481.63 per share on January 28, 2026, to $433.50 per share on January 29, 2026.
Additionally, on February 3, 2026, The Wall Street Journal reported in an article titled “Microsoft’s Pivotal AI Product Is Running Into Big Problems” that severe challenges and functionality issues had plagued Copilot, causing the application to lose market share. Specifically, The Wall Street Journal reported that “[c]onfusing brand positioning and interoperability problems have frustrated users.”
The Portnoy Law Firm represents investors in pursuing claims caused by corporate wrongdoing. The Firm’s founding partner has recovered over $5.5 billion for aggrieved investors. Attorney advertising. Prior results do not guarantee similar outcomes.
Lesley F. Portnoy, Esq.
Admitted CA, NY and TX Bar [email protected]
310-692-8883
www.portnoylaw.com
Investors are practically begging AI's big spenders to blink. Who will be first? Markets are making the option of pulling in the reins—or at least keeping capital spending steady—tantalizing.
Greg Abel took over as Berkshire Hathaway (BRKA -0.06%)(BRKB +0.46%) CEO this year, and over the past 12 months, there have been many notable changes to the company's holdings. Macy's, Delta Air Lines, and even tech giant Alphabet are new holdings. While Warren Buffett remains a big part of the business and says he initiated the move to buy Alphabet, there may still be more changes to come in Berkshire's portfolio under Abel.
With Buffett no longer CEO, it also opens the possibility for another tech-focused deal for Berkshire to pursue: buying Microsoft (MSFT +1.95%) shares. Here's why I think it will happen before the end of the year.
Image source: Getty Images.
Microsoft has excellent fundamentals Companies, schools, and a wide range of organizations around the world rely on Microsoft's software each and every day. Its Windows operating system and Office products are staples in many businesses. The company has been leveraging artificial intelligence (AI) to enhance them and unlock even more value (i.e., upselling opportunities) for the business.
Microsoft has the same type of market dominance and moat as both Alphabet and another top Berkshire stock, Apple. And the main reason Buffett didn't invest in Microsoft in the past was simply due to his close relationship with co-founder Bill Gates, to avoid even the appearance of access to inside information or a potential conflict of interest. Now, with Gates and Buffett no longer CEOs of their respective companies, it paves the way for Abel to make a move and add the top tech stock to Berkshire's portfolio.
The timing may also be ideal to do so, as Microsoft's stock has been falling heavily in value this year, down around 19% thus far. Trading at 20 times its estimated future earnings (based on analyst estimates), it's also a far cheaper buy than Alphabet, which trades at 23 times its projected future profits.
Today's Change
(
1.95
%) $
7.45
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$
389.15
The stock is a fantastic buy at a great price Although Microsoft isn't trading at a 52-week low anymore, it's still around the levels it was at back in early 2024. With greater earnings power now due to AI and more growth opportunities ahead, it may not drop a whole lot lower in value. And Berkshire, which recognized the value in Alphabet, may also see an intriguing opportunity to buy Microsoft's stock right now.
For all types of investors, including Berkshire and both value and growth-oriented investors, buying shares of the tech giant while they're at reduced levels could be a fantastic move and yield great returns later on.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.
Alphabet had long been Wall Street's favorite hyperscaler due to its expertise in converting high capital expenditures into revenue.
But investors expressed displeasure with company's plans, announced on Wednesday along with second-quarter earnings, to boost its 2026 capex forecast, as the internet giant rushes to open new data centers for artificial intelligence.
Shares of Google's parent slid 7% on Thursday, and Amazon, Meta and Microsoft all fell as well, underscoring increased scrutiny of infrastructure investments that are resulting in dwindling cash piles with uncertain returns. The three megacaps are set to report quarterly results this week.
In recent quarters, investors cheered capital spending hikes, interpreting them as proof of healthy demand and a maturing revenue backlog. Alphabet received the best reception on Wall Street — the stock is up about 70% over the past year — because its cloud infrastructure business has been growing faster than rivals and its Gemini models and services have gained traction in a market dominated by OpenAI and Anthropic.
But if last week's report is a guide, Google is no longer getting the benefit of the doubt. And Mark Mahaney, head of internet research at Evercore ISI, wrote in a note Wednesday that Alphabet's capex boost "increases the odds of similar behavior" from Amazon and Microsoft.
Microsoft and Meta will be next in testing investor appetite, when they report after the close on Wednesday. Amazon follows on Thursday.
In April, Microsoft projected $190 billion worth of capex and finance leases for the year, including $25 billion from higher component prices, as AI chip demand eats up memory supply.
"If they raise capex again, based on what we saw in the reaction of Google [last week], it's probably going to lead to selling pressure in the stock," Cowen analyst Derrick Wood told CNBC in an interview. Analysts polled by Visible Alpha expect $190.1 billion from Microsoft.
Following Alphabet's report, the consensus for Amazon crept up almost $2 billion to $207.4 billion, according to Visible Alpha.
'Growing AI fatigue'Amazon in February guided to $200 billion in capex for 2026, the highest among the group until Alphabet lifted the top end of its forecast to $205 billion. The company maintained that forecast in April, with CEO Andy Jassy telling investors at the time that its "plan is largely the same."
Several analysts wrote in research notes earlier this month that they expect Amazon to lift its capex guide for the year, as the company boosts investments in AI, custom chips and other costly bets like its nascent satellite internet service, and given higher memory prices.
Jake Dollarhide, CEO of Longbow Asset Management, whose top holding is Amazon, wrote in an email that the online retailer could struggle to impress investors "in this environment of growing AI fatigue, the sudden questioning of meteoric capex budget increases and Silicon Valley and the Mag 7 taking on noticeable levels of debt in order to fund the massive data center buildout."
Amazon's long-term debt shot up 81% to $119 billion from Dec. 31 to March 31. Alphabet's rose 111% to $98 billion during the first six months of 2026, while the company, long viewed as a money-printing machine, turned cash flow negative in the second quarter for the first time.
Amazon, Meta, Microsoft stock chart
Wedbush analysts wrote in a Thursday note that Alphabet's report suggested capacity remains constrained in the face of strong demand, and that there's a "willingness to spend." But they don't view a potential capex boost from Amazon as a complete negative.
"We view the trade-off as worthwhile given AWS's re-acceleration and Amazon's expanding platform advantages across Bedrock, Alexa and its logistics network," wrote the analysts, who recommend buying Amazon stock.
While Google's cloud has been growing faster, Amazon Web Services still leads the cloud infrastructure market, with Microsoft second. Google's cloud was 30% the size of AWS in 2020 and nearly 50% in the first quarter of 2026. Its cloud business recorded 82% expansion in the second quarter, the fastest growth since at least 2020, after increasing 63% in the prior period.
AWS revenue rose 28% in the first quarter, and analysts surveyed by FactSet expect nearly 32% for the second quarter. Revenue from Microsoft's Azure and other cloud services grew 40% in the first quarter, with FactSet's second-quarter consensus at 39%.
Read more CNBC tech newsSam Altman to meet with Trump administration, Senators this week. Here's what he plans to sayNvidia, SpaceX, Microsoft launch AI safety initiative as OpenAI cyberattack fallout continuesFrom Silicon Valley to DC, the tech world is suddenly obsessed with one concept in AI: DistillationSpaceX launches massive Starship rocket in first test flight since IPOMahaney wrote that cloud "demand appears relentless," but he noted that it's "hard to see anyone matching" Google's cloud growth rate during the quarter.
Meta, the lone hyperscaler that doesn't have an established cloud business, is expected to record capex this year of $138.9 billion and told investors in April that the number could reach $145 billion. The company is now looking to sell computing power to third parties.
For now, Meta is still throwing off cash. Analysts surveyed by FactSet expect Microsoft's free cash flow to go negative in the fourth quarter for the first time since at least 2001.
Amazon's free cash flow flipped into the red in the first quarter, and analysts surveyed by FactSet forecast it will stay there for the full year. The company last had negative free cash flow in 2021 and 2022 as it doubled its warehouse footprint in response to a pandemic-driven surge in e-commerce demand.
"I think that patience is required for these names because I do think that these will be AI winners over sort of the medium and longer term," said Tiffany Wade, a fund manager at Columbia Threadneedle, which held positions in Alphabet, Amazon and Microsoft at the end of June.
On Alphabet's earnings call, CEO Sundar Pichai contended that his company's strategy of calling in outside vendors for extra computing power to meet cloud demand will yield attractive margins within years, despite the cost.
"I think that's probably the right thing to do," Wade said. "You don't want to be turning away customers because you don't have capacity."
Bill Ackman’s Pershing Square Capital Management began accumulating Microsoft (NASDAQ:MSFT | MSFT Price Prediction) shares in February 2026 after the stock slid on its fiscal second-quarter report. Impressively, Akman has since built the stake to roughly $2.4 billion by the end of May 2026, funded in part by trimming his Alphabet (NASDAQ:GOOG) position.
Ackman disclosed the position in a lengthy post on X ahead of Pershing Square’s quarterly 13F filing, describing Microsoft as a “core holding.” Separately, Fortune reported on June 25, 2026 that Pershing Square has been building an Amazon (NASDAQ:AMZN) stake from scratch since roughly mid-2025, and that the roughly $2.4 billion position is now the firm’s second-largest holding.
What Ackman Bought, and Why It Matters Two mega-cap tech names now sit near the top of a portfolio historically built on concentrated, activist-flavored positions in consumer and real estate names. The Microsoft entry was timed to weakness, with MSFT stock trading right around $392 per share (down roughly 20% on a year-to-date basis), and well below its 200-day moving average of $444.22. Ackman’s public rationale is that Microsoft stock had de-rated to about 21x forward earnings on what he framed as overblown fears about Azure durability and Microsoft’s competitive position in AI.
The Amazon thesis is a valuation-plus-AI story. The company’s core profit center (AWS) grew 28% year over year in the March quarter, its fastest growth in 15 quarters, on a 37.7% operating margin. Amazon’s custom Trainium and Graviton silicon crossed a $20 billion annual run rate, and the company has locked in landmark commitments for up to 2GW of Trainium capacity for OpenAI and 5GW for Anthropic.
Ackman is far from alone here. Other notable billionaires and hedge funds including David Tepper, Seth Klarman, Al Gore’s Generation Investment Management, and Sanders Capital have been accumulating Amazon in recent filings.
The Underlying Thesis Both trades share a common structure. That is, buy a dominant AI beneficiary after the market has punished it for spending too aggressively on that same AI opportunity.
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Microsoft posted EPS of $4.27 versus $4.07 estimated, revenue of $82.89 billion (+18.3% YoY), Azure growth of 40%, an AI business at a $37 billion run rate (+123% YoY), and commercial RPO of $627 billion (+99% YoY). Capex hit $30.88 billion, up 84%, and that spending, rather than the demand backlog, is what compressed the multiple.
On the other hand, Amazon’s Q1 EPS of $2.78 versus $1.73 estimated and planned 2026 capex near $200 billion tell the same story.
Should Retirement Investors Follow? This is a defensible follow for a retirement-focused investor, with caveats. Ackman is buying quality on a drawdown rather than a distressed turnaround. Microsoft carries an operating margin of 45.6%, ROE of 33.28%, and a forward P/E near 20, with 54 buy or strong-buy ratings against 3 holds. Amazon offers 22.29% ROE and AWS-driven operating leverage. For a curated view of how professional money is positioning around AI infrastructure, our research team’s 7 Stocks Powering the AI Boom report frames the broader field.
My take is simply that Ackman’s timing looks reasonable, the fundamentals support the thesis, and both names screen as long-duration compounders. Following at these levels is worth serious consideration, though chasing them 20% higher after a rebound carries a very different risk profile.
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Bill Ackman’s Pershing Square began accumulating Microsoft (NASDAQ:MSFT | MSFT Price Prediction) shares in February 2026 and had built the position to roughly $2.4 billion by the end of May 2026, a stake Ackman disclosed publicly on X ahead of the fund’s Q1 13F filing.
In parallel, Pershing Square has been building a separate Amazon (NASDAQ:AMZN) position from scratch since roughly mid-2025, and Amazon now sits as the fund’s second-largest holding at approximately $2.4 billion. Here investors have two mega-cap tech names, two multi-billion-dollar bets, and an activist manager who rarely holds more than a dozen positions at once.
Microsoft (MSFT) The Microsoft trade is the more revealing of the two. Microsoft stock is down 20.72% year to date and 24.69% over the past year, trading near $389.90 against a 52-week high of $551.05. Ackman sold Alphabet shares to fund the buy and framed the setup as a market overreaction to concerns about Azure’s durability and Microsoft’s AI positioning, calling it a core holding at roughly 21 times forward earnings.
The underlying numbers back the thesis. The company’s fiscal Q3 2026 revenue came in at $82.89 billion, up 18.3% year over year, with EPS of $4.27 beating estimates. Impressively, Microsoft’s Intelligent Cloud segment grew 30%, its Azure profit center grew 40%, and Satya Nadella disclosed the “AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.” Commercial remaining performance obligations nearly doubled to $627 billion, while the company’s operating margin still runs above 46%. Forward P/E of 20x on a business compounding earnings above 20% is where Ackman-style concentrated value tends to strike.
Amazon (AMZN) The Amazon call rhymes. Amazon trades at $232.55, essentially flat over the past year despite Q1 2026 revenue of $181.52 billion, up 16.6%, and an EPS beat of $2.78 versus $1.73 expected. AWS grew 28%, its fastest pace in 15 quarters, on a base above $37 billion per quarter. Advertising ran at $17.24 billion, up 24%. Amazon’s in-house silicon effort (Graviton, Trainium, Nitro) crossed a $20 billion run rate with triple-digit growth, and OpenAI committed to roughly 2 GW of Trainium capacity beginning 2027. Value-oriented managers including David Tepper and Seth Klarman have also added to Amazon in recent quarters.
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The thesis binding both trades is straightforward: the market is pricing hyperscaler AI capex as a margin risk, while the operators keep converting that spend into accelerating cloud revenue. Microsoft trades at a discount to its own five-year multiple after a drawdown. Amazon’s core retail plus AWS combination is producing GAAP earnings growth of 74.8% year over year yet the stock has gone nowhere.
For a retirement-focused investor, the takeaway is about framework rather than position sizing. Ackman runs a concentrated book and can absorb multi-quarter drawdowns; a retiree usually cannot. The useful signal is that a disciplined manager is willing to hold two of the largest companies in the world at the same time because the price finally makes sense on cash flow terms. Following him in is defensible when the entry reflects the same math: a durable franchise, forward earnings you can underwrite, and a valuation that already contains bad news.
On MSFT at roughly 20x forward earnings with Azure at 40% growth, that math holds. On AMZN, the AWS acceleration does the same work. Adopting the framework is the defensible move, but copying position sizes blindly is a mistake.
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I keep buying Microsoft. Every paycheck, every dip, every time the stock looks tired, I open the account and add more. What keeps pulling me back is the one advantage I can’t find anywhere else in my portfolio: a company that already sits inside the workflow of the enterprise world and gets to sell AI to that captive base at software margins.
That’s the thesis. Microsoft (NASDAQ:MSFT | MSFT Price Prediction) ships a $30-per-user Copilot add-on to a captive base of over 400 million commercial seats at near-zero customer acquisition cost, and books the revenue as 80%+ gross margin recurring software cash flow. That is a distribution moat competitors cannot rebuild from scratch.
The Receipts Behind the Conviction In Q3 FY26, Microsoft’s AI business crossed a $37 billion annual run rate, up 123% year-over-year. Azure grew 40%. Commercial remaining performance obligations, the contracted backlog, nearly doubled to $627 billion. Operating margin sits at 45.62%, return on equity at 33.28%, debt-to-equity at 0.176. It was the fourth consecutive EPS beat: $4.27 against a $4.07 estimate. Operating cash flow was $46.68 billion in the quarter alone.
I look at those numbers and see a business converting compute into subscription cash flow faster than the market wants to price in. The stock is down 20.49% over the past year. Trailing P/E has compressed to 23. Forward P/E is 20. That is the multiple on a company growing revenue 18.3% year-over-year with a $627 billion backlog behind it.
Why Not the Obvious Alternatives Amazon (NASDAQ:AMZN) is the natural comparison because of AWS. My problem with AWS as a substitute: it lacks the productivity suite already sitting on every corporate laptop. Microsoft’s Azure grew 40% in Q3 FY26 and layers a software-monetization business on top of the same infrastructure spend. Alphabet (NASDAQ:GOOGL) has model horsepower, but the enterprise seat count and switching-cost data platform live inside Microsoft 365. Paid Microsoft 365 Copilot seats hit 15 million, with customers like Publicis purchasing over 95,000 seats in a single deal. That distribution is unavailable to buy elsewhere at this valuation.
The Risk I Take Seriously The real risk is capex. Q3 FY26 capex was $30.88 billion, up 84.39%. Prediction markets price 82% odds of Q4 capex above $44 billion. If AI demand softens, that spending drags on free cash flow. I have weighed it. Interest coverage sits at 53.89x. Net debt to EBITDA is 0.187. The balance sheet absorbs a bad year and keeps the dividend, the buyback, and the reinvestment cycle intact. Q2 FY26 alone returned $12.7 billion to shareholders, up 32%. A company that can spend $30 billion a quarter on infrastructure and still hand $12.7 billion back in the same period carries capex risk as survivable.
Why the Buy Button Stays Active Microsoft’s distribution moat compounds through every renewal, every seat added, every Copilot attach. Analyst consensus target sits at $558.21 against $402.29 today, with 54 of 57 covering analysts at Buy or Strong Buy. My conviction rests on the machine that produces that target, one $30 seat at a time.
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, /PRNewswire/ -- The Gross Law Firm issues the following notice to shareholders of Microsoft Corporation (NASDAQ: MSFT).
Shareholders who purchased shares of MSFT during the class period listed are encouraged to contact the firm regarding possible lead plaintiff appointment. Appointment as lead plaintiff is not required to partake in any recovery.
ALLEGATIONS: The complaint alleges that during the class period, Defendants issued materially false and/or misleading statements and/or failed to disclose that: (a) Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (b) Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (c) Microsoft needed to increase by billions of dollars its capital expenditures and divert GPU and CPU capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related R&D; and (d) as a result of (a)-(c) above, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and the Company's Copilot offerings had lost market share to rival products, a trend that was increasing.
DEADLINE: August 11, 2026 Shareholders should not delay in registering for this class action. Register your information here: https://securitiesclasslaw.com/securities/microsoft-corporation-loss-submission-form/?id=196364&from=4
NEXT STEPS FOR SHAREHOLDERS: Once you register as a shareholder who purchased shares of MSFT during the timeframe listed above, you will be enrolled in a portfolio monitoring software to provide you with status updates throughout the lifecycle of the case. The deadline to seek to be a lead plaintiff is August 11, 2026. There is no cost or obligation to you to participate in this case.
WHY GROSS LAW FIRM? The Gross Law Firm is a nationally recognized class action law firm, and our mission is to protect the rights of all investors who have suffered as a result of deceit, fraud, and illegal business practices. The Gross Law Firm is committed to ensuring that companies adhere to responsible business practices and engage in good corporate citizenship. The firm seeks recovery on behalf of investors who incurred losses when false and/or misleading statements or the omission of material information by a company lead to artificial inflation of the company's stock. Attorney advertising. Prior results do not guarantee similar outcomes.
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A securities fraud class action lawsuit has been filed on behalf of Microsoft investors after its stock plummeted 10% because Microsoft allegedly misled investors regarding its AI chatbot Copilot and cloud computing platform Azure.
, /PRNewswire/ -- Leading securities law firm Bleichmar Fonti & Auld LLP announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ:MSFT) and certain of the Company's senior executives for securities fraud after its significant stock drop resulting from potential violations of the federal securities laws.
If you invested in Microsoft, you are encouraged to obtain additional information by visiting: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
Key Details of the Microsoft ($MSFT) Class Action:
Lead Plaintiff Deadline: August 11, 2026 Alleged Misconduct: Securities fraud alleging that Microsoft misled investors regarding its Azure cloud computing platform and AI chatbot Copilot Stock Drop: January 28, 2026 – 10% Stock Drop Court: U.S. District Court for the Western District of Washington Action: Contact BFA Law to discuss your rights Investors have until August 11, 2026 to ask the Court to be appointed to lead the case. The complaint asserts securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of investors in Microsoft common stock. The class action is pending in the U.S. District Court for the Western District of Washington. It is captioned City of St. Clair Shores Police and Fire Retirement System, et al., No. 26-cv-02071.
Why is Microsoft Being Sued for Securities Fraud?
Microsoft is a multinational technology company that develops software, cloud services, and devices. In recent years, Microsoft's cloud computing platform named Azure has been Microsoft's main growth driver. A key reason for Azure's recent growth is Microsoft's multi-billion-dollar investment into AI, including the development of its own generative AI chatbot named Copilot.
According to the complaint, during the relevant period, Microsoft consistently touted Copilot's best-in-class capabilities, which purportedly drove widespread and growing user adoption. Copilot's apparent success allowed Microsoft to report surging Azure-related revenue.
As alleged, in truth, Copilot suffered from severe functionality issues that caused user adoption to decline and put Microsoft's Azure revenue at risk.
Why did Microsoft's Stock Drop?
On January 28, 2026, Microsoft announced disappointing 2Q 2026 financial results and that Azure growth had slowed suddenly. Microsoft also allegedly revealed for the first time that the number of Microsoft 365 Copilot premium customers totaled only 15 million, materially below analyst estimates.
This news caused the price of Microsoft common stock to decline $48.13 per share, or 10%, from $481.63 per share on January 28, 2026, to $433.50 per share on January 29, 2026.
Additionally, on February 3, 2026, The Wall Street Journal reported in an article titled "Microsoft's Pivotal AI Product Is Running Into Big Problems" that severe challenges and functionality issues had plagued Copilot, causing the application to lose market share. Specifically, The Wall Street Journal reported that "[c]onfusing brand positioning and interoperability problems have frustrated users."
Click here for more information: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
What Can You Do?
If you invested in Microsoft, you may have legal options and are encouraged to submit your information to the firm.
All representation is on a contingency fee basis; there is no cost to you. Shareholders are not responsible for any court costs or expenses of litigation. The firm will seek court approval for any potential fees and expenses.
BFA is a leading international law firm representing plaintiffs in securities class actions and shareholder litigation. It has been named a top plaintiff law firm by Chambers USA, The Legal 500, and ISS SCAS, and its attorneys have been named "Elite Trial Lawyers" by the National Law Journal, "Litigation Stars" by Benchmark Litigation, among the top "500 Leading Plaintiff Financial Lawyers" by Lawdragon, "Titans of the Plaintiffs' Bar" by Law360 and "SuperLawyers" by Thomson Reuters.
Most recently, The Legal 500 awarded BFA the most client satisfaction accolades of any plaintiff's securities litigation law firm, with clients noting: "[t]here is no better service provider in the practice area," "[t]he interest of the client is always front and center," and "[t]here isn't a better firm in this space." One testimonial described the firm as "nimble and entrepreneurial," with a "relentless focus on adding value for clients."
Among its recent notable successes, BFA recovered over $900 million in value from Tesla, Inc.'s Board of Directors, as well as $420 million from Teva Pharmaceutical Ind. Ltd.
For more information about BFA and its attorneys, please visit https://www.bfalaw.com.
Začal nejrušnější týden výsledkové sezóny, během kterého zveřejní hospodářské výsledky 158 firem z indexu S&P 500. Dnes odstartuje Coca-Cola, nejdůležitější čísla však přijdou ve středu a ve čtvrtek, kdy výsledky za druhé čtvrtletí představí giganti jako Apple, Amazon, Microsoft nebo Meta.
Dnes před začátkem obchodování by měla podle odhadů analytiků oslovených agenturou Bloomberg Coca-Cola vykázat zisk na akcii 0,93 dolaru a organický růst tržeb kolem 3,6 %. Hlavním tématem výsledků bude kybernetický útok, který dočasně narušil výrobu mlékárenské divize Fairlife, a jeho dopady na provoz společnosti.
Kromě Coca-Coly zveřejní v úterý před otevřením trhu výsledky také Boeing a PayPal. Od Boeingu se očekává ztráta na akcii ve výši 0,28 dolaru a záporné volné cash flow ve výši 331 milionů dolarů.
Po uzavření středečního obchodování se pozornost investorů přesune k velkým technologickým firmám, které navážou na výsledky Alphabetu z minulého týdne. Mateřská společnost Googlu sice vykázala silný růst zisku podpořený investicemi do společností jako SpaceX a Anthropic, zároveň však reportovala záporné volné cash flow a další navýšení CAPEXu, což část investorů znervóznilo (více zde).
Lze proto očekávat, že právě vývoj CAPEXu a cash flow bude jedním z hlavních témat také u Microsoftu, Mety a Amazonu. Od Microsoftu se očekává zisk na akcii 4,25 dolaru a meziroční růst tržeb o více než 13 % na 87,7 miliardy dolarů. CAPEX by podle odhadů měl dosáhnout 42 miliard dolarů a upravené volné cash flow 14,7 miliardy dolarů. Analytik Morgan Stanley Adam Wood očekává, že výsledky podpoří další růst cloudové platformy Azure i monetizace nástrojů Copilot.
V případě Meta Platforms analytici předpokládají růst tržeb o 25 % a zisk na akcii 7,14 dolaru. Klíčové bude sledovat, jak se firmě daří monetizovat AI produkty napříč její rozsáhlou uživatelskou základnou. Současně se očekává další navýšení letošního výhledu CAPEXu, které odráží rostoucí náklady na AI infrastrukturu. Jen za druhé čtvrtletí by investice měly dosáhnout přibližně 33 miliard dolarů, což odpovídá více než polovině očekávaných tržeb. Analytici zároveň očekávají záporné volné cash flow ve výši 1,2 miliardy dolarů.
Čtvrteční večer pak přinese výsledky Amazonu a Applu. U Amazonu investoři očekávají další silný růst cloudové divize AWS, jejíž tržby by měly vzrůst o více než 30 %. Optimismus panuje také v oblasti reklamy a e-commerce. Celkové tržby by měly dosáhnout přibližně 197 miliard dolarů a růst nejrychlejším tempem za posledních pět let. Zisk na akcii se očekává kolem 1,82 dolaru. V centru pozornosti bude opět CAPEX, který by měl přesáhnout 48 miliard dolarů.
Přestože se Apple AI investičního závodu neúčastní tak agresivně jako ostatní technologičtí giganti, i zde se očekává zvýšení investic. Pro rok 2027 by měly dosáhnout přibližně 18 miliard dolarů, což je však stále výrazně méně než u výše zmíněných společností. Celkově se od Applu očekává silný kvartál. Výsledky by měla podpořit vysoká poptávka po iPhonech a stabilní růst segmentu služeb, jehož tržby by měly dosáhnout přibližně 31 miliard dolarů. Celkové tržby za uplynulé čtvrtletí by měly činit téměř 109 miliard dolarů a zisk na akcii se očekává kolem 1,88 dolaru. Negativním faktorem zůstává růst cen pamětí, který zvyšuje výrobní náklady i konečné ceny produktů společnosti.
Microsoft on Monday talked up a new artificial intelligence model for spotting cybersecurity vulnerabilities. The move marks the company's first major push to rejuvenate its cybersecurity business since it brought back Google executive Hayete Gallot to run the unit.
When paired with OpenAI's general-purpose GPT-5.4, Microsoft's MAI-Cyber-1-Flash outperforms Anthropic's Mythos 5, Google's 3.5 Flash Cyber and OpenAI's GPT-5.5 Cyber on the CyberGym benchmark, the company said.
"We have world-leading performance at 50% of the cost," Mustafa Suleyman, CEO of Microsoft AI, said at an event the company held in San Francisco.
The generative model is the software maker's first for cybersecurity. It will work in its Project Perception, a collection of AI agents for discovering and fixing weaknesses that becomes available in public preview starting Aug. 3, according to a blog post from Gallot.
She rejoined Microsoft in February to become executive vice president of security, as its top leader in the category, former Amazon cloud executive Charlie Bell, became an individual contributor.
Generative AI models have made it easier for attackers to quickly try to exploit newly documented vulnerabilities. Anthropic and OpenAI have released models that can help cybersecurity practitioners with defense.
So far in 2026, Microsoft shares have come down 19%. "Given that consensus view that open-source (Chinese and other) AI models are poised to take share from the frontier labs, investor sentiment about Microsoft's high OpenAI exposure has swung back to being perceived as a risk," Microsoft analysts led by Karl Keirstead wrote in a Sunday note to clients. Keirstead recommends buying the stock.
This year the company has announced its own model that can generate code in the GitHub Copilot tool, and lately it's been drawing on a first-party model in the Excel spreadsheet program. While Microsoft CEO Satya Nadella has a partnership with OpenAI to maintain, but he's also been allocating computing power to train models in house, with an eye toward spending efficiency.
"By combining specialized models and data with the right agents, tools, security context, and harness, we can advance the frontier of cost to outcome," Nadella wrote in a Monday X post.
Microsoft hasn't disclosed the scale of its cybersecurity business since 2023, when it said annual revenue exceeded $20 billion.
In 2023, Microsoft introduced the Security Copilot assistant for cybersecurity practitioners that incorporated OpenAI's GPT-4. The service now comes with Microsoft's two most high-end productivity software bundles. Project Perception can suggest and implement code changes once given permission, and it can connect with non-Microsoft products.
Cybersecurity executives "look at this as maybe a way to lower the bar and be able to bring in more talent to actually staff the SOCs and and get more people to participate because right now it's very limited in the industry," Gallot told CNBC. Companies maintain security operating centers (SOCs) full of people who look out for threats to information-technology systems.
Last week, OpenAI said its models exploited a vulnerability and attacked AI startup Hugging Face's infrastructure during a test. Hugging Face used a model from Chinese lab Z.ai to conduct forensic analysis.
"I think it's a great illustration of why you need to defend with AI against the bad guys who have AI, right?" Gallot said.
There's plenty of room for Microsoft to improve the performance of the new model.
"We have a unique data set," Suleyman said in an interview. "We've used way less than 1% of that data."
The 2026 Q2 earnings season faces its busiest week yet, with a wide variety of notable companies on deck to report. Headlining the docket is a bunch of Magnificent 7 members whose sentiment is driven by cloud results, specifically Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) .
Amazon Earnings
Regarding AWS, the most important part of Amazon’s release over recent years, our consensus estimate stands at $40.6 billion, reflecting a nearly 32% YoY growth rate. An accelerating/decelerating growth rate among AWS remains the biggest sentiment driver behind the post-earnings reaction.
Microsoft Earnings
Microsoft’s Intelligent Cloud segment, which includes Azure, will again be a focus concerning its post-earnings reaction. Sentiment has largely been beaten down in this business given flat growth rates over recent periods, though management has noted that the stagnation has mostly been due to capacity constraints. Our consensus estimate for Intelligent Cloud revenue stands at $38.1 billion, suggesting a 27% YoY growth rate.
Bottom Line
The 2026 Q2 earnings season has picked up considerably, with Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) both on the docket this week. Other members of the beloved bunch are on the docket as well, such as Apple and Meta.
The post-earnings reaction of AMZN and MSFT will be driven nearly entirely by their respective cloud results, with investors likely to cheer accelerating growth and punish any signs of slowdown or stagnation. MSFT has been in the spotlight as of late on the development, with its YoY cloud growth rates largely disappointing investors.
Microsoft (MSFT +1.95%) told investors back in April what this year would cost. The software giant expects about $190 billion of capital expenditures in calendar 2026, up 61% from 2025, as it races to build the data centers its cloud computing and artificial intelligence (AI) businesses demand. Chief financial officer Amy Hood added a detail that made the number sting a bit more: about $25 billion of it simply reflects higher component prices, as memory and storage costs surge across the industry.
On Wednesday, July 29, Microsoft reports results for the fourth quarter of its fiscal year. The report is the next test of the bargain underneath all that spending -- whether demand for Azure, the cloud business at the center of this build-out, keeps growing fast enough to pay for it.
So far, it has. Here's a closer look at both sides of the ledger heading into Wednesday's report.
Image source: Getty Images.
What $190 billion commits Microsoft to The number deserves some sizing. In its fiscal third quarter of 2026 (ended March 31, 2026), Microsoft's capital expenditures, including finance leases, were $31.9 billion, up 49% year over year. Management guided for over $40 billion in the quarter it reports Wednesday.
And the calendar-year plan of about $190 billion works out to well over half of the revenue the company's current pace implies for a full year.
The component-price detail deserves its own mention, too. About $25 billion of Microsoft's 2026 outlay buys no additional capacity. It just covers the higher cost of parts -- the memory and storage whose prices have surged across the industry since last fall. For a company spending at this scale, supply chain inflation is now, in essence, in its own right.
Of course, capital spending doesn't stay on the balance sheet forever. As data centers come online, depreciation flows into the income statement and can weigh on margins for years to come. The more Microsoft spends today, the more earnings its cloud business has to deliver tomorrow just to stand still.
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The number that has to keep up Now, for the demand side, which is the reason the spending hasn't spooked me yet.
Azure and other cloud services revenue rose 40% year over year in fiscal Q3, or 39% in constant currency -- an acceleration from 38% constant-currency growth in fiscal Q2. And management guided for 39% to 40% constant-currency growth again in fiscal Q4. A business already at enormous scale is still speeding up, not slowing down.
Even more, supply remains the bottleneck, not demand. Hood said in April that the company expects "to remain constrained at least through 2026." Microsoft's AI business, meanwhile, has reached an annual revenue run rate of $37 billion, up 123% year over year.
Profits are absorbing the spending so far, as well. Fiscal third-quarter revenue climbed 18% year over year to $82.9 billion, with Microsoft Cloud accounting for $54.5 billion of it, up 29%. Operating income increased 20% to $38.4 billion, while earnings per share jumped 23% to $4.27. This isn't a company sacrificing its bottom line to fund a build-out. At least not yet.
For the fiscal fourth quarter, management guided for revenue of $86.7 billion to $87.8 billion, which implies 13% to 15% year-over-year growth. The headline numbers will come first, but Azure's growth rate and the capacity commentary around it may matter more for how the stock reacts.
That combination is what makes Wednesday's report a genuine test. If Azure grows at or above the guided range and management still describes demand outrunning supply, the $190 billion keeps looking like capacity the market has already spoken for. But if Azure slips below the high-30s while spending accelerates, the margin math starts to tighten, and the stock could get repriced quickly.
The stock, for its part, gives investors more room than it did a year ago. Shares closed Friday at $381.70, down about 31% from their 52-week high of $555.45, and they trade at about 23 times earnings. Given 18% revenue growth and 23% earnings-per-share growth, that multiple arguably doesn't demand perfection -- a rare thing among the big AI spenders.
So, I like the stock. Of course, my view would change if Azure's constant-currency growth slipped meaningfully below the guided range while capital spending kept climbing. Short of that, Microsoft's $190 billion looks less like a gamble on future demand and more like a bill for demand it already has.
Microsoft opened a new front in the AI security wars on Monday, unveiling its first custom-built cybersecurity model and a sweeping agentic defense platform — and making an argument that could reshape how enterprises buy AI: the future belongs not to the biggest model, but to the cheapest one that's good enough, routed intelligently. The company announced MAI-Cyber-1-Flash, a compact security model developed in-house by its Microsoft AI (MAI) division, embedded inside MDASH, Microsoft's multi-agent harness for finding and fixing software vulnerabilities.
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Meta Platforms (NASDAQ:META | META Price Prediction) and Microsoft (NASDAQ:MSFT) both step to the microphone on July 29, and the setups look nothing alike. Meta’s last quarter showed AI plugging straight into a $150B+ ad engine reaching 3.56 billion daily users. Microsoft’s most recent report leaned on cloud backlog and capacity that takes quarters to convert.
Ad Impressions Print Cash. Azure Waits on Steel. Meta’s Q1 report showed ad impressions up 19% YoY and average price per ad up 12%, with revenue of $56.31B (+33.1% YoY). Mark Zuckerberg framed it plainly: “We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs.” Advantage+ and recommendation upgrades turned infrastructure into inventory sold the same week.
Microsoft’s Q3 FY2026 delivered revenue of $82.89B (+18.3%) with Azure up 40% and an AI run rate of $37B, +123% YoY. Satya Nadella called it “the beginning phases of AI diffusion.” The catch: enterprise contracts cannot be turned on faster than servers arrive.
Business Driver Meta Microsoft Main Growth Engine AI-optimized ads Azure and Copilot Monetization Speed Immediate impressions Multi-quarter onboarding CapEx Growth YoY +46.8% +84.4% One Ships Bits, the Other Ships Buildings Meta’s FY2026 CapEx raised to $125-145B is aimed at superintelligence models that improve targeting on day one. Microsoft’s $627B commercial RPO backlog (+99% YoY) is real, but locked behind data center construction and GPU delivery windows. Prediction markets caught the difference: Polymarket assigns a 94.7% probability Meta beats, versus 91% for Microsoft. Close, but the tone diverges more than the odds.
The Next Test Is Capex Justification Since April 29, META is down 10.97% and MSFT is down 9.88%, so both stocks enter this earnings report bruised. I will be watching whether Meta’s ad price growth lands in the 9%-12% range the crowd expects (38.5% probability) and whether Microsoft’s Azure growth clears the 40%-42% consensus (53.5% probability). Anything less on Azure with capex still climbing would repeat April’s 9.99% single-day drop.
Why I Lean Toward Meta for This Report Honestly, I think Meta walks into July 29 with the cleaner story. AI spend is already showing up in the ad auction, and a P/E of 22 gives room to breathe. Microsoft is the higher-quality compounder over five years, but at 23 times earnings with capex up 84% YoY, patience is required. If you want a defensive AI compounder, Microsoft still fits. If you want the faster feedback loop into this report, Meta is where I would rather be. If capex commentary sours on either call, I would step back on both and reassess in October.
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by Todd Bishop on Jul 27, 2026 at 12:56 pmJuly 27, 2026 at 1:01 pm
Microsoft Security EVP Hayete Gallot introduces Project Perception’s agent teams Monday in San Francisco. (Screenshot) Microsoft on Monday unveiled Project Perception, an AI cybersecurity system built to defend against AI-driven attacks, aiming to keep pace with both hackers and its technology rivals.
The system, which enters public preview Aug. 3, coordinates three sets of AI agents: red team agents that hunt for paths an attacker could take, blue team agents that determine which risks matter and green team agents that make fixes.
It’s based on MAI-Cyber-1-Flash, a new AI model designed specifically for cybersecurity, which the company says does most of the work of larger models at half the cost. It runs in conjunction with OpenAI’s GPT-5.4, which Microsoft reserves for the 10% of tasks it calls exceptionally hard.
Microsoft says the combination scores 96% on CyberGym, a benchmark measuring how well AI systems find real vulnerabilities in large codebases.
The company did not give the model to independent testers before releasing it, according to The New York Times. Microsoft says the model was independently assessed by a third party.
The model is available at launch only to customers of MDASH, Microsoft’s AI-powered tool for finding vulnerabilities in code.
Microsoft CEO Satya Nadella said in a post on X that the initiative is an example of how the company can get better results per dollar by not locking its security systems to a single AI model family.
“This is the benefit of building the harness, context/signals, and action space separate from one model family,” he wrote. “By combining specialized models and data with the right agents, tools, security context, and harness, we can advance the frontier of cost to outcome.”
The initiative was announced Monday morning at an event in San Francisco by Hayete Gallot, the EVP for Microsoft Security, joined by colleagues including Mustafa Suleyman, CEO of Microsoft AI.
In a blog post, Gallot wrote that security needs a new “Cyber Stack,” and that approaches built for a world of human actors cannot keep pace with AI, agents and machine-speed attacks.
In an interview last week for GeekWire’s Microsoft 2.5 series, Gallot said that MDASH was effectively Microsoft’s first step into agentic security.
No system can reason directly over 100 trillion signals a day, so Microsoft is distilling them into a graph that agents can navigate, Gallot said, routing each threat to whichever model handles it best. In practice, this means software can quarantine a device or cut off access on its own.
The announcement comes days after OpenAI disclosed that two of its AI models broke out of a testing sandbox and hacked into Hugging Face, the AI development platform.
Rivals have been more cautious, under government restrictions. Two of the four systems Microsoft benchmarked against, Anthropic’s Mythos 5 and OpenAI’s GPT-5.6 Sol, are limited to small groups of government-approved customers.
With four Mag 7 companies reporting earnings this week, Maria Llerena discusses the CapEx expectations for Microsoft (MSFT), Meta Platforms (META), and Amazon (AMZN) after Alphabet (GOOGL) shares sold off when it increased figures. Nick Raich adds that Wall Street is focused more on the AI spending than profits its generating, urging investors to focus more on earnings than CapEx.
Microsoft Corp (NASDAQ:MSFT) is set to report fiscal fourth quarter results this week, with UBS maintaining its ‘Buy’ rating while taking a more balanced tactical stance ahead of the release, citing expectations for higher capital spending alongside steady cloud demand.
Following recent conversations with Microsoft customers and partners, UBS wrote that Azure and Amazon Web Services demand "appears to be very healthy." However, the firm believes capacity constraints for external customers and early efforts to optimize AI token usage could limit the scope for meaningful upside to Azure guidance.
UBS also noted that recent GitHub Copilot pricing changes should provide a modest boost to Azure growth.
The firm raised its fiscal 2027 capital expenditure estimate to $261 billion from $234 billion, citing continued demand from model training workloads and memory cost inflation. It added that investors are increasingly focused on AI infrastructure spending after recent reactions to results from Oracle and Alphabet's Google.
On the productivity software side, UBS became more constructive on Microsoft 365, pointing to Copilot improvements and pricing changes across the Microsoft 365 Commercial Cloud business. The firm increased its fiscal 2027 Microsoft 365 Commercial Cloud growth forecast by 70 basis points to 16.2%.
UBS wrote that Microsoft shares have underperformed many peers this year, leaving investors cautious about rising AI investment, returns on AI spending and exposure to frontier AI models. It estimates investor expectations for fiscal 2027 capital expenditures are already in the $255 billion to $260 billion range.
"In our view, this set-up mitigates the downside risk even if AI capex were to rise and the H2 Azure guide was reaffirmed (not raised)," UBS wrote.
While trimming its price target to $480 from $510 to reflect weaker sentiment toward AI infrastructure stocks, UBS said Microsoft remains reasonably valued based on its AI monetization potential and expectations for steady mid-teens earnings growth.
Shares of Microsoft traded hands at $391 on Monday afternoon, down about 19% so far this year.
Microsoft MSFT shares are inching higher heading into the giant’s fiscal Q4 earnings scheduled to be released after market close on Wednesday, July 29th.
Wall Street has set a high bar for MSFT, with consensus estimates set at $87.42 billion for revenue, representing a 14.4% year-on-year increase – and $4.21 per share for earnings, reflecting a 15.3% growth from last year.
Still, Microsoft stock has come under pressure amidst a broader tech rout in recent weeks, currently down more than 15% versus its June high.
The recent weakness in MSFT shares has failed to deter options traders, though.
Heading into the quarterly print, the put-to-call ratio on contracts expiring at the end of this week sits at 0.41, indicating a bullish skew.
And the upper price on those contracts, according to Barchart, is set at $416.54, signaling potential for a more than 6% rally in Microsoft Corp on the back of the earnings release.
Crucially, this optimism is mirrored in the technical setup as well.
MSFT has recently ripped through its 20-day moving average (MA), and is now trading just under its 50-day MA, with a clear break above the $399 level expected to accelerate positive momentum after Q2 financials.
Adding a layer of nuance to the earnings setup, UBS’s senior analyst Karl Kierstead trimmed his price target on Microsoft shares today to $480.
The revision follows recent field checks with roughly a dozen key enterprise clients and channel partners.
Kierstead pointed to near-term capacity constraints on external Azure customers and growing token-optimization efforts by developers, which could cap immediate upside in cloud revenue growth.
Moreover, UBS cautioned that MSFT’s capex could escalate beyond previous expectations due to memory chip inflation and heavy infrastructure commitments, noting that public markets have recently punished tech giants whose surging AI spend fails to instantly yield expanding operating margins.
Even with the price target haircut, UBS maintained its Buy rating on MSFT stock – stressing that the long-term structural thesis for the tech titan remains firmly intact.
In fact, Kierstead’s downwardly revised price objective still represents a massive 22% upside from here. According to him, underlying demand across Azure and rival AWS remains “exceptionally” healthy.
Plus, strategic monetization levers, such as GitHub Copilot pricing updates and growing enterprise AI integration, are expected to provide a steady tailwind to cloud growth.
With Microsoft trading at an “attractive valuation” relative to its long-term growth outlook, UBS views the current pullback as a temporary consolidation before the next leg higher.
A small 0.93% dividend yield on MSFT makes it even more compelling as a long-term holding, at least for income-focused investors.
I keep hitting the buy button on Microsoft (NASDAQ:MSFT | MSFT Price Prediction) into every drawdown, and Wednesday’s fiscal Q4 earnings will not change that. The stock is down 20.72% year to date and 24.69% over the past year, and I have been adding the whole way. The reason is simple: this is the only megacap AI story where the capex bill arrives with a customer purchase order attached.
The Thesis in One Line Microsoft is being run like a B2B utility taxing the corporate world’s digital workflow. The capex looks less like a speculative gamble and more like a factory expansion to meet pre-ordered demand. Wall Street treated Alphabet like a consumer media giant taking a capital-intensive gamble on AI infrastructure. I do not think it will read the Microsoft earnings report the same way, and my portfolio is positioned accordingly.
The Receipts Last quarter, Microsoft’s AI business hit an annual revenue run rate of $37 billion, up 123% year-over-year. Commercial remaining performance obligations, the contracted backlog customers have already committed to spend, reached $627 billion, nearly doubling year over year. Azure grew 40%. That is what backs the $30.876 billion quarterly capex line, up 84.39% year over year.
The balance sheet still funds the buildout without stress. Debt-to-equity sits at 0.176 and interest coverage at 53.89x. Operating cash flow was $46.679 billion in a single quarter. Return on equity of 33.28% and operating margins of 45.62% tell me the returns on invested capital have not cracked under the spending. This is why I keep buying a 0.85% yielder that has raised the payout for two decades.
Why Not Alphabet Alphabet (NASDAQ:GOOGL) is the obvious alternative. Google Cloud grew 82% to $24.768 billion, which is real. The financing story is the problem. Alphabet’s Q2 capex hit $44.924 billion, free cash flow went to negative $5.855 billion, long-term debt more than doubled from $46.5 billion to $98.2 billion, the company raised roughly $70 billion in combined debt and equity, and the buyback got suspended. Shares fell 7.13% on the report despite the beat. Alphabet’s dividend yield is 0.54%, thinner than Microsoft’s, and I am less inclined to own the cloud growth if I have to underwrite the funding gap to get it.
The Real Risk The risk is that significant investments in products and services may not achieve expected returns. AI infrastructure depreciates fast, and enterprise adoption could slow. I take that seriously. What keeps my thesis intact is the $627 billion RPO. Microsoft is building capacity against contracts already signed, including the restructured OpenAI arrangement that added $250 billion in incremental Azure services commitments.
Forward Conviction Prediction markets put a 91% probability on another EPS beat Wednesday, with a 92.5% chance capex prints above $38 billion. I do not need the crowd to be right. I need the RPO to keep converting, Azure to keep compounding, and the dividend to keep growing. On the current earnings yield of 3.59% with a forward multiple around 23, I am paying a factory price for a toll booth, and I plan to keep buying it.
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Microsoft has introduced an agentic security system designed to protect against cybersecurity threats posted by attackers using artificial intelligence and agents.
The new Project Perception turns signals into real-time protections and uses AI to defend against AI, the company said in a Monday (July 27) blog post.
“Project Perception is based on a simple idea: effective defense requires continuous understanding of how an attacker sees the world, how a defender evaluates risk and how protections are improved over time,” Microsoft said in the post.
Perception coordinates three classes of specialized agents, including red team agents that identify potential vulnerabilities before an attacker can exploit them, blue team agents that investigate and determine what represents meaningful risk, and green team agents that take corrective actions and strengthen defenses, according to the post.
“Working together, these agents form a closed-loop system that continuously discovers, evaluates and improves an organization’s security posture,” the post said.
Project Perception uses a multi-model architecture that encompasses frontier and specialized cyber models and optimizes for quality and cost, per the post.
“As part of this multi-model strategy, we are committed to bringing customers the best models for each security task, including innovating with our own specialized models,” Microsoft said in the post.
Together with agents and models, Project Perception includes signals and sensors, security context, a harness that coordinates the agents and models, and actuators that turn decisions into protection, according to the post.
“Together, these layers create a continuous learning system that can understand risk, adapt to changing conditions and improve security outcomes over time,” the post said.
It was reported July 15 that Microsoft’s cybersecurity business was developing more AI security products, cutting back on some of its more traditional security products and consolidating engineering teams.
The report said Microsoft was making these changes to better respond to customer demand for solutions to the threat of AI-powered hacks, and to capture some of the spending that is going to AI firms Anthropic and OpenAI.
The PYMNTS Intelligence report “Where Payments Decisions Happen: How Issuer Data Is Powering the Next Era of Commerce” found that 42% of issuers said AI has helped them save more than $5 million from fraud attempts in recent years.
Microsoft Security EVP Hayete Gallot explains why AI is forcing a complete rethink of cybersecurity and how the company's new "Project Perception" aims to defend against machine-speed attacks. She speaks to Bloomberg Tech host Ed Ludlow.
Key Takeaways Microsoft guided Azure and cloud revenue growth of 39-40% in constant currency for the quarter.MSFT expanded AI offerings with Microsoft IQ, Foundry updates and new Azure infrastructure.Microsoft entered fiscal Q4 with AI demand exceeding capacity as capital spending remained elevated. Microsoft's (MSFT - Free Report) fourth-quarter fiscal 2026 results, scheduled to be reported on April 29, are likely to be driven by steady growth in its cloud platform, Azure.
The quarter unfolded against a backdrop of surging AI consumption, expanding agentic platforms and persistent capacity constraints that had defined the company's cloud narrative through fiscal 2026.
Click here to know how the company’s overall fiscal fourth-quarter performance is likely to have been.
Azure Guidance and CapacityManagement's guidance, issued alongside third-quarter fiscal 2026 results, called for Azure and other cloud services revenues to grow 39% to 40% in constant currency, consistent with the third quarter's pace. Intelligent Cloud revenues were guided between $38 billion and $38.3 billion. Leadership indicated on the prior call that Azure capacity was expected to remain constrained through the remainder of 2026, even as dock-to-live times for new GPUs improved and additional capacity came online, with modest acceleration anticipated in the second half of the calendar year. Capital expenditure, including finance leases, was expected to exceed $40 billion for the quarter, supporting the buildout underpinning that growth.
AI Monetization SignalsHeading into the fiscal fourth quarter, Microsoft's annualized AI revenue run rate stood above $37 billion, having grown 123% year over year in the third quarter, while Copilot paid seats had surpassed 20 million. Momentum in Copilot usage was described by leadership as running on a different trajectory across coding, productivity and security, a trend that fourth-quarter commercial activity appeared to extend. Microsoft 365 Copilot E7, the Frontier Suite bundling Microsoft 365 E5, Copilot and Agent 365, reached general availability on May 1, alongside Agent 365 itself, giving enterprise customers a consolidated agentic offering. Deployments tied to these products, including a large-scale Copilot rollout across Atos Group's workforce announced in June, offered early evidence of enterprise uptake during the quarter.
Platform and Model ExpansionThe quarter featured several developments that should enhance Microsoft's competitive position against other cloud giants, including Alphabet's (GOOGL - Free Report) Google, Amazon (AMZN - Free Report) and Oracle (ORCL - Free Report) .
At Microsoft Build in early June, the company introduced Microsoft IQ, unifying Work IQ, Fabric IQ and Foundry IQ to give agents shared, governed context across Microsoft's data estate, with Work IQ reaching general availability during the month. Foundry agents gained the ability to publish directly into Microsoft 365 Copilot and Teams, also reaching general availability in June, while additional third-party models became generally available within Microsoft Foundry, broadening the multi-model options available to enterprise builders alongside new in-house MAI models. The Azure Cobalt 200 Arm-based virtual machine entered early access preview, offering up to 50% better generational performance for agentic workloads, and GPU-accelerated capabilities were added to Fabric Data Warehouse. Infrastructure additions included a planned datacenter expansion in Cheyenne, Wyoming, announced in April, and a new East US 3 Azure region alongside additional availability zones across existing U.S. regions.
Balancing Demand Against CostCollectively, these developments pointed to broadening AI adoption across coding, productivity and infrastructure layers, supporting the case for Azure growth holding near the guided range. Yet the pace of platform expansion also reinforced that capital intensity was not easing, with billing shifts such as GitHub Copilot's move to usage-based pricing in June adding a variable that could influence near-term consumption trends without yet being reflected in comparable prior-period figures.
Investment PerspectiveMicrosoft entered its fourth-quarter fiscal 2026 report with Azure demand still outpacing supply and AI annualized revenues expanding rapidly, supported by a wave of agentic platform launches and multi-model expansion through Foundry. Enterprise deployments and new infrastructure announced during the quarter reinforced the demand narrative, but continued capacity constraints and an elevated capital expenditure run rate kept the durability of AI-driven margins as the central open question ahead of results. MSFT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Microsoft has topped earnings expectations consistently in recent years, yet its stock is near a one-year low. So while it’s worth paying attention to revenue and profits when the company reports its fiscal year-end results Wednesday, there are clearly other forces at play on Wall Street.
Here are the key stats and trendlines to watch going into the earnings report for the fourth quarter of the company’s 2026 fiscal year, ended June 30.
Core numbers: Analysts expect revenue of about $87.7 billion for the quarter, up 14.7% from a year ago, and earnings of $4.24 per share, up 16%, according to Yahoo Finance. Microsoft’s own revenue guidance was $86.7 billion to $87.8 billion — meaning Wall Street is looking for a result at the very top of the company’s range.
For the full fiscal year, that works out to roughly $329 billion in revenue, up 17% from $281.7 billion in fiscal 2025.
Capital expense: This is the big one. Microsoft told investors to expect more than $40 billion in capital spending for the quarter, which would be a record — up from $31.9 billion in the March quarter and $37.5 billion in the one before that. About two-thirds goes to GPUs and other short-lived hardware.
For the calendar year, the company expects to spend roughly $190 billion. Chief Financial Officer Amy Hood said about $25 billion of that total is the result of higher component prices.
One big question this week will be the company’s guidance for capex going forward. Because this is the fiscal year-end, Wednesday brings the company’s first capital spending guidance for fiscal 2027, which began July 1.
Capex concerns: Google parent Alphabet last week foreshadowed what may happen to Microsoft. It reported revenue up 24% and cloud revenue up 82%, then raised its own capital spending forecast to as much as $205 billion — well above the roughly $188 billion analysts expected. The stock fell 7% the next day and Alphabet fell below its prior $4 trillion market valuation.
Big picture, investors seem to have decided the capital spending is getting ahead of the payoff. Data centers and chips cost money now, while the AI revenue meant to justify them arrives over years — if it ever reaches the scale these companies are promising.
Moody’s Ratings raised its own red flags about this last week, saying the six largest cloud and AI platforms will spend about $785 billion this year and close to $1 trillion in 2027. Demand is real and accelerating, the ratings agency said, but “the ultimate return on investment is unclear.”
Cloud margins: This is where the capital spending starts to become evident in the company’s core quarterly results. Microsoft Cloud gross margin — the share of cloud revenue left after the cost of delivering the service — has slipped from 72% three years ago to 66% last quarter.
For the quarter it reports Wednesday, Microsoft told investors to expect about 64%. On the prior earnings call, Hood attributed the decline to AI infrastructure costs and growing use of GitHub Copilot, partly offset by efficiency gains in Azure.
Microsoft doesn’t absorb the cost of a data center all at once. It spreads the expense across the years the equipment is expected to last. That cost shows up here, in the expense of running the cloud — making this one of the first places where the capital spending hits earnings.
Microsoft Azure: On its prior conference call, Microsoft said it expected the Azure cloud business to grow 39% to 40% in constant currency in Q4, a slight acceleration from the 39% posted in Q3. Analysts expect roughly the same, with some outliers such as BNP Paribas looking for 41%.
But the published expectations aren’t the real bar. In January, Azure grew 38% — ahead of Microsoft’s guidance — and the stock fell 10%, because Wall Street had privately been expecting 39.4%.
Azure’s growth rate also reflects a choice as much as it does demand. Microsoft has been routing scarce computing capacity to its own products first — Copilot, GitHub Copilot, internal research — and selling what remains to Azure customers. Hood has said the growth rate would have been higher had that capacity gone to customers instead. Demand continues to outrun supply, and the company expects to stay “constrained at least through 2026.”
Business Insider reported Sunday that the shortage of supply has pushed Microsoft to shop for additional computing capacity outside its own data centers, evaluating capacity from Amazon and Google, and that Amazon stepped in following a series of GitHub outages.
Copilot and AI revenue: Microsoft said in April that its AI business had reached a $37 billion annual revenue run rate, up 123% from a year earlier. It was the first update to that number since January 2025, when the company put it at $13 billion. Whether Microsoft discloses it a third time Wednesday is a signal in itself.
Microsoft 365 Copilot passed 20 million paid seats last quarter, up from 15 million in January. That’s about 4.4% of the 450 million commercial seats across Microsoft 365 — the gap that has drawn skepticism from investors all year. Microsoft said it expects the number of new paid seats to grow again this quarter.
Meanwhile, the company is launching new initiatives to drive adoption of AI among its customers. Earlier this month it launched the Microsoft Frontier Company, a $2.5 billion effort to put 6,000 engineers inside customer organizations to help them deploy AI.
Wednesday is also the first report since Microsoft changed how it charges for GitHub Copilot. As of June 1, customers pay based on usage rather than a flat fee per user.
The OpenAI backlog: Microsoft’s remaining performance obligations — RPO, a measure of contracts customers have signed but the company has not yet fulfilled — reached $627 billion last quarter, up 99% from a year earlier. About a quarter of that is expected to become revenue in the next 12 months. It’s the strongest evidence that there’s real demand supporting the AI buildout.
But the RPO is also highly concentrated. In January, when it stood at $625 billion, 45% was tied to OpenAI — roughly $281 billion committed by a single customer that is still losing money. Take OpenAI out of last quarter’s figure and the growth drops from 99% to 26%.
Then in April, Microsoft and OpenAI revamped their partnership, and OpenAI ended its exclusive commitment to run on Azure.
Reliability: On July 23, a bug in Microsoft’s automated network maintenance tooling cut a West US Azure data center off from the company’s global network, knocking out Teams, SharePoint, OneDrive and Copilot Chat for about five hours. Microsoft has published a preliminary post-incident report, and a final one is due within two weeks.
The outage falls in the quarter that began July 1, so it won’t appear in Wednesday’s numbers. But it comes as Microsoft is asking businesses to hand AI agents real control of their operations.
Retirement charge: Wednesday’s results will include about $900 million in one-time costs from Microsoft’s voluntary retirement program, the first in the company’s 51-year history. Hood said roughly $350 million falls in the cost of revenue and $550 million in operating expenses.
About 8,750 U.S. employees were eligible — 7% of Microsoft’s U.S. workforce — and about 30% accepted, Chief People Officer Amy Coleman confirmed in an interview with GeekWire, in line with what the company expected. Those departures reduced the size of the 4,800-job cut Microsoft announced July 6, which happened after this quarter ended.
Even with the retirement costs, Microsoft told investors it expects operating margins for the full fiscal year to be about a point higher than last year. Hood also said on last quarter’s call that headcount declined year over year and will keep declining in fiscal 2027.
Windows: Microsoft expects Windows OEM revenue — what PC makers pay to put Windows on their machines — to decline close to 20% this quarter.
A few factors are driving this:
Last year’s wave of PC upgrades, when support for Windows 10 ended, makes for a tough comparison. PC makers stocked up on parts and machines ahead of rising memory prices and are now working through them. The PC market itself is slower, because memory prices have made computers more expensive. The memory shortage is hitting Microsoft a few different ways. In addition to adding about $25 billion to the company’s capital spending this calendar year, as noted above, it lowers what Microsoft earns from Windows. Also, in late June, Microsoft raised Xbox console prices by $100 to $150, saying storage and memory costs had risen more than 2.5 times.
This week: Facebook parent Meta reports the same afternoon as Microsoft, with Apple and Amazon on Thursday and Alphabet already out. Check back Wednesday afternoon for coverage.
Microsoft on Monday launched its first cybersecurity-specialized model alongside a new AI cybersecurity platform at a small event in San Francisco, taking a big swipe at major players in the space — namely Anthropic, Google and OpenAI.
The company describes MAI-Cyber-1-Flash as a model that’s built “to find challenging vulnerabilities in complex codebases.” The model is built to animate MDASH, Microsoft’s harness dedicated to software vulnerability identification and remediation.
The new security platform is dubbed Perception, and it’s designed to deploy teams of agents to assist with and automate various security workflows, including identifying and remediating bugs. The platform can also integrate with MDASH.
The company claims MAI-Cyber-1-Flash is significantly more powerful (and more cost-effective) than competitor models, based on its performance on an established AI cybersecurity benchmark.
“We’re very very excited to announce our results,” said Mustafa Suleyman, the co-founder of DeepMind and current CEO of Microsoft AI. “We have MAI-1 Cyber Flash binded [sic] with GPT 5.4 inside of the MDASH harness — which beats out Gemini, GPT 5.5 Cyber, GPT 5.6 Sol, and Mythos 5 on Cyber Gym, which is the primary benchmark that we all use. The golden benchmark.”
“We’re shipping this into production immediately,” he added.
Noting that hackers are increasingly using AI in their cyberattacks, Hayete Gallot, Microsoft’s vice president for security, described Perception as a way for enterprise defenders to “defend against AI with AI at the scale and speed that the attackers have.”
Perception uses agentic red teams, blue teams, and green teams. The red teams can provide detailed simulations of potential attacks — providing context about potential threat actors and the likely vulnerabilities that they might exploit. Blue teams are dedicated to detecting and triaging existing bugs, while green teams take “corrective actions” against those bugs.
Dave Weston, the lead engineer for Perception, described the platform as a massive efficiency upgrade for corporate defenders. “We’ve gone from this taking hours and hours of manual work from multiple specialized folks across the security organization — appsec hunters, remediation engineers, you name it — and in minutes, we have a fix for all of this. Not only do we discover the issues and prioritize them, but we have detection, posture fixing, and even a code fix.”
Though AI has offered new defensive capabilities to companies, its availability to cybercriminals has given rise to a dazzling array of potential threats.
Microsoft’s new security tools, which the company said will be available in preview on November 3, will enter an increasingly crowded field of AI cybersecurity solutions. Earlier this year, Anthropic launched Mythos, a security platform that was released to a small coterie of partner organizations through a program called Glasswing. OpenAI has also launched its own security solution in May through a program called Day Break.
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Lucas is a senior writer at TechCrunch, where he covers artificial intelligence, consumer tech, and startups. He previously covered AI and cybersecurity at Gizmodo. You can contact Lucas by emailing [email protected].
Carnegie Investment Counsel increased its stake in Microsoft Corporation (NASDAQ:MSFT – Free Report) by 2.8% in the 1st quarter, according to the company in its most recent filing with the SEC. The fund owned 428,997 shares of the software giant’s stock after purchasing an additional 11,848 shares during the quarter. Microsoft makes up 3.0% of Carnegie Investment Counsel’s investment portfolio, making the stock its 3rd largest holding. Carnegie Investment Counsel’s holdings in Microsoft were worth $156,616,000 as of its most recent filing with the SEC.
A number of other large investors have also recently added to or reduced their stakes in MSFT. Taylor Securities Services Inc. acquired a new position in Microsoft during the 4th quarter valued at $2,616,000. Werba Rubin Papier Wealth Management grew its position in Microsoft by 15.7% in the 4th quarter. Werba Rubin Papier Wealth Management now owns 12,492 shares of the software giant’s stock worth $6,041,000 after purchasing an additional 1,698 shares during the last quarter. SG Americas Securities LLC increased its holdings in shares of Microsoft by 2,332.1% during the 4th quarter. SG Americas Securities LLC now owns 6,746,017 shares of the software giant’s stock worth $3,262,509,000 after purchasing an additional 6,468,645 shares during the period. World Investment Advisors raised its position in shares of Microsoft by 22.1% during the fourth quarter. World Investment Advisors now owns 272,424 shares of the software giant’s stock valued at $131,750,000 after buying an additional 49,371 shares during the last quarter. Finally, Overbrook Management Corp raised its position in shares of Microsoft by 2.8% during the fourth quarter. Overbrook Management Corp now owns 87,535 shares of the software giant’s stock valued at $42,334,000 after buying an additional 2,384 shares during the last quarter. Institutional investors own 71.13% of the company’s stock.
Microsoft Price Performance Shares of MSFT opened at $381.70 on Monday. The company has a quick ratio of 1.27, a current ratio of 1.28 and a debt-to-equity ratio of 0.08. The company has a 50-day moving average price of $398.21 and a two-hundred day moving average price of $407.62. The stock has a market cap of $2.84 trillion, a price-to-earnings ratio of 22.72, a P/E/G ratio of 1.17 and a beta of 1.13. Microsoft Corporation has a 12 month low of $349.20 and a 12 month high of $555.45.
Microsoft (NASDAQ:MSFT – Get Free Report) last released its quarterly earnings data on Wednesday, April 29th. The software giant reported $4.27 earnings per share for the quarter, beating the consensus estimate of $4.06 by $0.21. Microsoft had a return on equity of 31.94% and a net margin of 39.34%.The company had revenue of $82.89 billion for the quarter, compared to analyst estimates of $81.44 billion. During the same period in the prior year, the company posted $3.46 EPS. The company’s revenue was up 18.3% compared to the same quarter last year. Equities analysts predict that Microsoft Corporation will post 16.7 EPS for the current fiscal year.
Microsoft Dividend Announcement The business also recently declared a quarterly dividend, which will be paid on Thursday, September 10th. Shareholders of record on Thursday, August 20th will be given a $0.91 dividend. This represents a $3.64 dividend on an annualized basis and a yield of 1.0%. The ex-dividend date is Thursday, August 20th. Microsoft’s dividend payout ratio is 21.67%.
Analyst Ratings Changes A number of equities research analysts recently weighed in on MSFT shares. Rothschild & Co Redburn decreased their target price on Microsoft from $450.00 to $400.00 and set a “neutral” rating on the stock in a research report on Thursday, April 23rd. Wells Fargo & Company cut their price target on Microsoft from $650.00 to $625.00 and set an “overweight” rating for the company in a report on Wednesday, July 15th. Robert W. Baird reduced their price objective on Microsoft from $540.00 to $500.00 and set an “outperform” rating for the company in a research report on Wednesday, April 15th. CLSA began coverage on Microsoft in a report on Monday, July 20th. They set an “outperform” rating and a $535.00 price objective on the stock. Finally, UBS Group restated a “buy” rating on shares of Microsoft in a research report on Friday, April 24th. Forty-two equities research analysts have rated the stock with a Buy rating and six have issued a Hold rating to the company. Based on data from MarketBeat, Microsoft presently has an average rating of “Moderate Buy” and a consensus target price of $555.40.
Get Our Latest Research Report on Microsoft
Insider Buying and Selling at Microsoft In other news, EVP Takeshi Numoto sold 4,500 shares of the company’s stock in a transaction dated Wednesday, June 10th. The shares were sold at an average price of $402.84, for a total value of $1,812,780.00. Following the sale, the executive vice president owned 47,468 shares of the company’s stock, valued at approximately $19,122,009.12. This represents a 8.66% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. Also, EVP Amy Coleman sold 1,262 shares of the stock in a transaction dated Thursday, May 14th. The stock was sold at an average price of $411.34, for a total transaction of $519,111.08. Following the sale, the executive vice president owned 46,003 shares of the company’s stock, valued at $18,922,874.02. This trade represents a 2.67% decrease in their position. The SEC filing for this sale provides additional information. Insiders have sold 23,762 shares of company stock worth $10,508,361 over the last three months. Company insiders own 0.03% of the company’s stock.
Key Headlines Impacting Microsoft Here are the key news stories impacting Microsoft this week:
Positive Sentiment: Microsoft joined 25 tech companies in urging U.S. policymakers not to impose broad restrictions on open-weight and open-source AI models, a stance that supports its broader AI ecosystem strategy and could help preserve flexibility for future product development. Reuters article Positive Sentiment: Microsoft also backed a coalition letter with Nvidia, Meta, and other firms arguing that open-weight AI is important for U.S. leadership, reinforcing investor confidence that the company remains a major AI platform player rather than being boxed into one model provider. Business Insider article Positive Sentiment: Microsoft’s expanded Databricks partnership extends a key cloud/data-AI relationship through the 2030s, which should help Azure adoption and strengthen long-term enterprise demand for Microsoft’s cloud services. TipRanks article Neutral Sentiment: Several previews ahead of Microsoft’s July 29 earnings report say the big investor focus will be FY2027 CapEx guidance and Azure growth, with analysts expecting strong results but worrying that AI infrastructure spending could weigh on free cash flow and margins. MarketBeat article Negative Sentiment: Multiple law firms issued class-action alerts and deadline reminders tied to Microsoft securities-fraud claims, including allegations related to Copilot disclosures, which adds headline risk and may keep some investors cautious into earnings. GlobeNewswire article Negative Sentiment: Broader tech weakness tied to AI spending fears also weighed on Microsoft, as investors sold mega-cap names after seeing massive capital outlays across the sector and questioning near-term returns on AI investment. Fox Business article About Microsoft (Free Report)
Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.
Microsoft’s product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).
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Citizens Financial Group Inc. RI lifted its position in Microsoft Corporation (NASDAQ:MSFT – Free Report) by 1.2% in the 1st quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission (SEC). The firm owned 589,634 shares of the software giant’s stock after purchasing an additional 6,776 shares during the period. Microsoft comprises about 3.0% of Citizens Financial Group Inc. RI’s portfolio, making the stock its 5th biggest holding. Citizens Financial Group Inc. RI’s holdings in Microsoft were worth $218,264,000 at the end of the most recent reporting period.
A number of other hedge funds have also recently added to or reduced their stakes in MSFT. Midwest Trust Co increased its holdings in Microsoft by 5.3% in the first quarter. Midwest Trust Co now owns 779,476 shares of the software giant’s stock valued at $288,539,000 after buying an additional 39,281 shares in the last quarter. Fifth Third Bancorp boosted its stake in shares of Microsoft by 59.1% during the 1st quarter. Fifth Third Bancorp now owns 4,576,422 shares of the software giant’s stock worth $1,694,054,000 after acquiring an additional 1,700,110 shares in the last quarter. Glass Wealth Management Co LLC grew its position in shares of Microsoft by 4.3% during the 1st quarter. Glass Wealth Management Co LLC now owns 32,102 shares of the software giant’s stock valued at $11,883,000 after acquiring an additional 1,322 shares during the period. Sovran Advisors LLC grew its position in shares of Microsoft by 23.1% during the 1st quarter. Sovran Advisors LLC now owns 59,112 shares of the software giant’s stock valued at $24,105,000 after acquiring an additional 11,105 shares during the period. Finally, Markel Group Inc. increased its stake in shares of Microsoft by 0.4% in the 1st quarter. Markel Group Inc. now owns 537,630 shares of the software giant’s stock valued at $199,014,000 after purchasing an additional 1,950 shares in the last quarter. 71.13% of the stock is owned by hedge funds and other institutional investors.
Insider Buying and Selling In other Microsoft news, EVP Amy Coleman sold 1,262 shares of the stock in a transaction dated Thursday, May 14th. The shares were sold at an average price of $411.34, for a total value of $519,111.08. Following the completion of the sale, the executive vice president owned 46,003 shares in the company, valued at approximately $18,922,874.02. This represents a 2.67% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through the SEC website. Also, CEO Judson Althoff sold 15,500 shares of the firm’s stock in a transaction that occurred on Monday, June 1st. The stock was sold at an average price of $460.99, for a total transaction of $7,145,345.00. Following the completion of the transaction, the chief executive officer directly owned 110,477 shares in the company, valued at $50,928,792.23. This trade represents a 12.30% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last three months, insiders have sold 23,762 shares of company stock worth $10,508,361. 0.03% of the stock is owned by insiders.
Analyst Upgrades and Downgrades MSFT has been the topic of a number of recent analyst reports. Royal Bank Of Canada reiterated a “buy” rating on shares of Microsoft in a research report on Friday, May 22nd. Wedbush restated an “outperform” rating and issued a $575.00 price objective on shares of Microsoft in a research report on Wednesday, May 13th. Rothschild & Co Redburn reduced their target price on Microsoft from $450.00 to $400.00 and set a “neutral” rating for the company in a research note on Thursday, April 23rd. BMO Capital Markets increased their target price on Microsoft from $500.00 to $515.00 and gave the company an “outperform” rating in a research report on Tuesday, July 7th. Finally, Raymond James Financial cut shares of Microsoft from a “market perform” rating to a “market perform” rating in a research note on Tuesday, May 5th. Forty-two investment analysts have rated the stock with a Buy rating and six have given a Hold rating to the stock. Based on data from MarketBeat, the stock presently has an average rating of “Moderate Buy” and a consensus target price of $555.40.
Get Our Latest Stock Analysis on Microsoft
Microsoft Price Performance NASDAQ MSFT opened at $381.70 on Monday. The business has a fifty day moving average price of $398.21 and a 200 day moving average price of $407.62. Microsoft Corporation has a one year low of $349.20 and a one year high of $555.45. The company has a debt-to-equity ratio of 0.08, a quick ratio of 1.27 and a current ratio of 1.28. The company has a market cap of $2.84 trillion, a P/E ratio of 22.72, a P/E/G ratio of 1.17 and a beta of 1.13.
Microsoft (NASDAQ:MSFT – Get Free Report) last announced its quarterly earnings data on Wednesday, April 29th. The software giant reported $4.27 earnings per share for the quarter, beating analysts’ consensus estimates of $4.06 by $0.21. Microsoft had a return on equity of 31.94% and a net margin of 39.34%.The company had revenue of $82.89 billion for the quarter, compared to analyst estimates of $81.44 billion. During the same quarter last year, the firm posted $3.46 EPS. The firm’s revenue for the quarter was up 18.3% on a year-over-year basis. Research analysts anticipate that Microsoft Corporation will post 16.7 EPS for the current fiscal year.
Microsoft Dividend Announcement The firm also recently declared a quarterly dividend, which will be paid on Thursday, September 10th. Stockholders of record on Thursday, August 20th will be paid a $0.91 dividend. This represents a $3.64 annualized dividend and a dividend yield of 1.0%. The ex-dividend date of this dividend is Thursday, August 20th. Microsoft’s dividend payout ratio (DPR) is currently 21.67%.
Key Stories Impacting Microsoft Here are the key news stories impacting Microsoft this week:
Positive Sentiment: Microsoft joined 25 tech companies in urging U.S. policymakers not to impose broad restrictions on open-weight and open-source AI models, a stance that supports its broader AI ecosystem strategy and could help preserve flexibility for future product development. Reuters article Positive Sentiment: Microsoft also backed a coalition letter with Nvidia, Meta, and other firms arguing that open-weight AI is important for U.S. leadership, reinforcing investor confidence that the company remains a major AI platform player rather than being boxed into one model provider. Business Insider article Positive Sentiment: Microsoft’s expanded Databricks partnership extends a key cloud/data-AI relationship through the 2030s, which should help Azure adoption and strengthen long-term enterprise demand for Microsoft’s cloud services. TipRanks article Neutral Sentiment: Several previews ahead of Microsoft’s July 29 earnings report say the big investor focus will be FY2027 CapEx guidance and Azure growth, with analysts expecting strong results but worrying that AI infrastructure spending could weigh on free cash flow and margins. MarketBeat article Negative Sentiment: Multiple law firms issued class-action alerts and deadline reminders tied to Microsoft securities-fraud claims, including allegations related to Copilot disclosures, which adds headline risk and may keep some investors cautious into earnings. GlobeNewswire article Negative Sentiment: Broader tech weakness tied to AI spending fears also weighed on Microsoft, as investors sold mega-cap names after seeing massive capital outlays across the sector and questioning near-term returns on AI investment. Fox Business article Microsoft Company Profile (Free Report)
Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.
Microsoft’s product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).
See Also Five stocks we like better than Microsoft RTX and Lockheed Earnings: Can Strong Guidance Reset the Defense Trade? These 4 Earnings Reports Expose the Market’s Growing Economic Divide Broadcom May Be the Biggest Winner From Alphabet’s Earnings Volatility Is Back and These 3 Market Tollbooths Are Best Positioned to Profit
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Fifth Third Bancorp raised its holdings in Microsoft Corporation (NASDAQ:MSFT – Free Report) by 59.1% during the 1st quarter, according to its most recent filing with the Securities and Exchange Commission. The fund owned 4,576,422 shares of the software giant’s stock after buying an additional 1,700,110 shares during the period. Microsoft accounts for about 3.1% of Fifth Third Bancorp’s portfolio, making the stock its 5th largest holding. Fifth Third Bancorp owned about 0.06% of Microsoft worth $1,694,054,000 as of its most recent SEC filing.
Other institutional investors and hedge funds have also recently added to or reduced their stakes in the company. Norges Bank bought a new position in Microsoft in the fourth quarter valued at approximately $50,664,631,000. Auto Owners Insurance Co raised its stake in shares of Microsoft by 56,160.8% during the 4th quarter. Auto Owners Insurance Co now owns 60,116,384 shares of the software giant’s stock worth $29,073,486,000 after purchasing an additional 60,009,531 shares in the last quarter. Nuveen LLC bought a new stake in shares of Microsoft during the 1st quarter worth approximately $18,733,827,000. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC boosted its holdings in shares of Microsoft by 500.0% in the 3rd quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 59,543,261 shares of the software giant’s stock valued at $30,840,432,000 after buying an additional 49,618,571 shares during the last quarter. Finally, Laurel Wealth Advisors LLC boosted its holdings in shares of Microsoft by 49,640.3% in the 2nd quarter. Laurel Wealth Advisors LLC now owns 29,967,038 shares of the software giant’s stock valued at $14,905,904,000 after buying an additional 29,906,791 shares during the last quarter. 71.13% of the stock is owned by institutional investors.
Insider Activity at Microsoft In other Microsoft news, EVP Amy Coleman sold 1,262 shares of the company’s stock in a transaction on Thursday, May 14th. The stock was sold at an average price of $411.34, for a total value of $519,111.08. Following the transaction, the executive vice president directly owned 46,003 shares of the company’s stock, valued at $18,922,874.02. This represents a 2.67% decrease in their position. The sale was disclosed in a filing with the SEC, which is available through this hyperlink. Also, EVP Takeshi Numoto sold 4,500 shares of the stock in a transaction on Wednesday, June 10th. The stock was sold at an average price of $402.84, for a total value of $1,812,780.00. Following the transaction, the executive vice president owned 47,468 shares in the company, valued at $19,122,009.12. The trade was a 8.66% decrease in their position. The disclosure for this sale is available in the SEC filing. Insiders sold 23,762 shares of company stock worth $10,508,361 in the last ninety days. 0.03% of the stock is owned by company insiders.
Microsoft Price Performance Microsoft stock opened at $381.70 on Monday. The company’s 50-day moving average price is $398.21 and its two-hundred day moving average price is $407.62. The company has a quick ratio of 1.27, a current ratio of 1.28 and a debt-to-equity ratio of 0.08. The stock has a market cap of $2.84 trillion, a P/E ratio of 22.72, a P/E/G ratio of 1.17 and a beta of 1.13. Microsoft Corporation has a twelve month low of $349.20 and a twelve month high of $555.45.
Microsoft (NASDAQ:MSFT – Get Free Report) last issued its quarterly earnings data on Wednesday, April 29th. The software giant reported $4.27 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $4.06 by $0.21. Microsoft had a return on equity of 31.94% and a net margin of 39.34%.The company had revenue of $82.89 billion during the quarter, compared to analysts’ expectations of $81.44 billion. During the same quarter in the previous year, the company posted $3.46 earnings per share. The business’s revenue was up 18.3% on a year-over-year basis. As a group, analysts expect that Microsoft Corporation will post 16.7 EPS for the current year.
Microsoft Dividend Announcement The company also recently declared a quarterly dividend, which will be paid on Thursday, September 10th. Investors of record on Thursday, August 20th will be paid a $0.91 dividend. The ex-dividend date is Thursday, August 20th. This represents a $3.64 annualized dividend and a yield of 1.0%. Microsoft’s payout ratio is 21.67%.
Microsoft News Summary Here are the key news stories impacting Microsoft this week:
Positive Sentiment: Microsoft joined 25 tech companies in urging U.S. policymakers not to impose broad restrictions on open-weight and open-source AI models, a stance that supports its broader AI ecosystem strategy and could help preserve flexibility for future product development. Reuters article Positive Sentiment: Microsoft also backed a coalition letter with Nvidia, Meta, and other firms arguing that open-weight AI is important for U.S. leadership, reinforcing investor confidence that the company remains a major AI platform player rather than being boxed into one model provider. Business Insider article Positive Sentiment: Microsoft’s expanded Databricks partnership extends a key cloud/data-AI relationship through the 2030s, which should help Azure adoption and strengthen long-term enterprise demand for Microsoft’s cloud services. TipRanks article Neutral Sentiment: Several previews ahead of Microsoft’s July 29 earnings report say the big investor focus will be FY2027 CapEx guidance and Azure growth, with analysts expecting strong results but worrying that AI infrastructure spending could weigh on free cash flow and margins. MarketBeat article Negative Sentiment: Multiple law firms issued class-action alerts and deadline reminders tied to Microsoft securities-fraud claims, including allegations related to Copilot disclosures, which adds headline risk and may keep some investors cautious into earnings. GlobeNewswire article Negative Sentiment: Broader tech weakness tied to AI spending fears also weighed on Microsoft, as investors sold mega-cap names after seeing massive capital outlays across the sector and questioning near-term returns on AI investment. Fox Business article Wall Street Analyst Weigh In MSFT has been the topic of a number of recent analyst reports. Cantor Fitzgerald restated an “overweight” rating and set a $502.00 target price on shares of Microsoft in a report on Thursday, June 4th. Tigress Financial boosted their price objective on shares of Microsoft from $595.00 to $680.00 and gave the stock a “buy” rating in a research note on Wednesday, May 6th. UBS Group reaffirmed a “buy” rating on shares of Microsoft in a report on Friday, April 24th. BNP Paribas Exane dropped their price objective on Microsoft from $556.00 to $555.00 and set an “outperform” rating on the stock in a research note on Friday, May 1st. Finally, Argus cut their price objective on Microsoft from $620.00 to $510.00 and set a “buy” rating for the company in a research report on Friday, July 10th. Forty-two investment analysts have rated the stock with a Buy rating and six have assigned a Hold rating to the stock. According to data from MarketBeat, the company has a consensus rating of “Moderate Buy” and an average price target of $555.40.
Get Our Latest Analysis on Microsoft
Microsoft Company Profile (Free Report)
Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.
Microsoft’s product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).
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I keep hitting the buy button on Microsoft (NASDAQ:MSFT | MSFT Price Prediction), and I am adding again before the fiscal Q4 report drops after the close on July 29. My horizon is 12 to 36 months. My reason is one sentence: I am locking in more shares of a high-margin enterprise monopoly at a compressed valuation multiple, and the market has handed me the discount.
The stock trades at $381.70, down 20.72% year to date and 24.69% over the past year. The business remained strong. The multiple compressed.
Three Reasons My Conviction Holds Start with the cloud and AI engine. Last quarter, Azure and other cloud services grew 40%. Microsoft Cloud revenue crossed $54.5 billion in a single quarter, up 29%. The AI business alone crossed a $37 billion annual run rate. Satya Nadella put a number on it: “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.”
Then the backlog. Commercial remaining performance obligations reached $627 billion, up 99% year over year. That is signed enterprise demand queued up for future delivery. The pipeline is contracted.
Then the quality of the earnings behind it. Operating margin ran at 45.62%, net margin at 36.15%, and return on equity at 33.28%. Debt to equity sits at 0.176 with interest coverage of 53.89. Forward P/E is 20, trailing 23, on a business compounding revenue 18.3% year over year. That is the compressed multiple I keep pointing to.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.
Why Not Amazon or Alphabet The two names a reader would reach for first are Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL). My money keeps going to Microsoft first for one reason I can measure: the $627 billion contracted backlog anchored by Microsoft 365, Dynamics 365, GitHub, LinkedIn, and Copilot sitting on nearly every enterprise desktop already. Azure at 40% growth paired with a 45.62% operating margin is the combination I have not been able to replicate elsewhere.
The Risk I Will Not Wave Away Capex hit $30.88 billion last quarter, up 84.39% year over year. If AI monetization slows before this infrastructure is depreciated, free cash flow gets squeezed. Reddit is chewing on this openly. One thread put it directly: “MSFT earnings on July 29 and I genuinely can’t tell if the CapEx is the story or the problem.” Fair question. My answer: a $627 billion signed backlog and an AI run rate growing 123% are the enterprise customers writing checks against that capex right now. The risk is real. The thesis does not break unless those two numbers break.
What Keeps the Buy Button Active Operating cash flow last quarter was $46.68 billion, up 26.01%. Microsoft returned $12.7 billion to shareholders in a single quarter earlier this year through dividends and buybacks. The dividend yields 0.85%, small but funded by one of the strongest cash machines in the market. Analysts carry 54 buy ratings, 3 holds, and zero sells. I buy for the cash flow underneath the price targets, and every quarter Microsoft keeps compounding it, my next lot gets easier to justify.
I am adding this week, and I will keep adding until the multiple stops being kind.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.
Jay Woods points out the inflationary concerns he sees lingering over the Fed beyond crude oil prices. Out of the Mag 7 earnings, he says Microsoft (MSFT) will be the one to watch the most as Azure cloud growth and tentative CapEx increases take focus of investors.
Four of the largest public companies in the world report quarterly financial results this week, reports that could have a big impact on several sectors and market indexes. Here’s a look at the Magnificent Seven stocks reporting this week and what investors should expect.
The reports this week are:
"Investors look for confirmation that massive AI investments are translating into stronger revenue growth, expanding margins, and sustained demand across cloud, advertising, devices, and e-commerce," Freedom Capital Markets Chief Market Strategist Jay Woods said of the four Magnificent Seven earnings reports in a weekly newsletter.
Woods said the company’s outlooks will be key to justify lofty valuations heading into the second half of 2026.
The market expert highlights that this will be the last quarterly report for Apple under CEO Tim Cook.
ETFs to WatchThe four earnings reports could put pressure on several market indexes and the exchange-traded funds (ETFs) that track them.
In the SPDR S&P 500 ETF Trust (NYSE:SPY), the four stocks make up 18%, with the following weightings:
Apple: 7.8%, second largest holding Microsoft: 4.5%, third largest holding Amazon.com: 3.6%, fourth largest holding Meta: 2.1%, eighth largest holding In the Invesco QQQ Trust (NASDAQ:QQQ), the four stocks make up 19.9% of assets, with Apple the second largest holding at 8.1% and all four being top 10 components.
Three of the four stocks are also members of the Dow Jones Industrial Average. The three stocks in the index make up the following holdings in the SPDR Dow Jones Industrial Average ETF (NYSE:DIA):
Microsoft: 4.4%, fifth largest holding Apple: 3.8%, ninth largest holding Amazon.com: 2.7%, 17th largest holding The earnings reports this week could make those indexes and ETFs volatile, along with sectors like technology, semiconductors, ecommerce, social media, telecommunications, and more.
What Earnings History Says, Key Items to WatchMicrosoft: Analysts are expecting the company to report revenue of $87.61 billion and earnings per share of $4.23, up from $76.44 billion and $3.65 year-over-year. The company has beaten analyst estimates for revenue in 13 straight quarters and for earnings per share in 15 straight quarters. Investors will be looking for growth in customer spending for AI and cloud products, along with commentary on capex spending going forward.
Stock Price ActionHere’s a look at the current stock prices and performances for year-to-date in 2026 and over the last 52 weeks.
SummaryMicrosoft Corporation faces free cash flow compression and margin pressure from surging AI infrastructure CAPEX, with shares down over 20% in the past year.Base case analysis implies MSFT is priced below its 8%-12% WACC, offering little margin of safety and justifying a Hold rating at current levels.Robust Intelligent Cloud growth alone likely cannot sustain historical returns; achieving >$600B revenue requires sustained high-margin segment growth, which remains uncertain.Key risks include margin dilution from capital-intensive AI data centers, competitive pressures, and heavy reliance on OpenAI for backlog realization. lcva2/iStock Editorial via Getty Images
Microsoft Corporation's (MSFT) share price has come under pressure lately, down over 20% the past year, due to investor concerns over free cash flow compression driven by heavy CAPEX and margin pressure from AI infrastructure costs. Under
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Not investment advice.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
New York, New York--(Newsfile Corp. - July 27, 2026) - Bronstein, Gewirtz & Grossman, LLC, a nationally recognized investor-rights law firm, announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ: MSFT) and certain of its officers.
This lawsuit seeks to recover damages against Defendants for alleged violations of the federal securities laws on behalf of all persons and entities that purchased or otherwise acquired Microsoft securities between May 1, 2025 and January 28, 2026, both dates inclusive (the "Class Period"). Such investors are encouraged to join this case by visiting the firm's site: bgandg.com/MSFT.
Microsoft Case Details
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements because they failed to disclose that:
Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit ("GPU") and central processing unit ("CPU") capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development ("R&D"); and as a result of the above, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft's Copilot offerings had lost market share to rival products, a trend that was increasing.What's Next for Microsoft Investors?
A class action lawsuit has already been filed. If you wish to review a copy of the Complaint, you can visit the firm's site: bgandg.com/MSFT, or you may contact Peretz Bronstein, Esq. or his Client Relations Manager, Nathan Miller, of Bronstein, Gewirtz & Grossman, LLC at 917-590-0911. If you suffered a loss in Microsoft you have until August 11, 2026, to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn't require that you serve as lead plaintiff.
No Cost to Microsoft Investors
We, Bronstein, Gewirtz & Grossman LLC, represent investors in class actions on a contingency fee basis. That means we will ask the court to reimburse us for out-of-pocket expenses and attorneys' fees, usually a percentage of the total recovery, only if we are successful.
Why Bronstein, Gewirtz & Grossman, LLC for Microsoft Securities Class Action?
Bronstein, Gewirtz & Grossman, LLC is a nationally recognized firm that represents investors in securities fraud class actions and shareholder derivative suits. Our firm has recovered hundreds of millions of dollars for investors nationwide. More at www.bgandg.com
"Our practice centers on restoring investor capital and ensuring corporate accountability, which serves to uphold the essential integrity of the marketplace," said Peretz Bronstein, Founding Partner of Bronstein, Gewirtz & Grossman, LLC.
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Prior results do not guarantee similar outcomes.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/301534
Source: Bronstein, Gewirtz & Grossman, LLC
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Key Takeaways Microsoft is likely to report earnings results on July 29, a key event for AI and tech ETFs.Azure growth is the key to easing AI ROI concerns and lifting sentiment. GXPT, VGT and GAMR may react sharply as Microsoft remains a top holding. Microsoft Corporation (MSFT - Free Report) is set to report fourth-quarter fiscal 2026 earnings results on July 29, 2026 — an event that could become a key catalyst not only for the software giant but also for artificial intelligence (AI)-focused exchange-traded funds (ETFs).
Despite robust growth in its cloud computing and AI businesses, Microsoft has emerged as one of the weakest-performing mega-cap technology stocks in 2026, leaving investors confused, per a The Street article, as quoted on Yahoo Finance.
Unlike Nvidia, shares of which have continued to rally on booming AI demand, Microsoft's stock has fallen 19.3% from the start of the year till July 24, 2026.
Bank of America Anticipates ImprovementDespite the recent weakness, Bank of America analyst Tal Liani remains optimistic on Microsoft. Ahead of the July 29 earnings release, Liani reiterated a Buy rating and maintained a $500 price target, while raising his earnings estimates for the next two fiscal years, per a The Street article, as quoted on Yahoo Finance.
According to Liani, Microsoft is trading at around 19 times his projected fiscal 2027 earnings, well below its five-year average valuation multiple of 29 times. He believes that the market is focusing too heavily on near-term capital expenditure, while overlooking Microsoft's long-term earnings potential, per Yahoo Finance.
Azure Growth Remains Major CatalystFor investors, Azure's performance is expected to be the single most important metric in the earnings report.
Microsoft has guided for Azure revenue growth in the high-30% to 40%, while Bank of America expects growth of 39-40%, per a The Street article, as quoted on Yahoo Finance.
Meeting or exceeding this level would demonstrate that Microsoft's expanding AI infrastructure is successfully converting customer demand into revenues. However, a weaker-than-expected Azure number can reignite concerns over whether Microsoft's enormous AI investments are delivering adequate returns.
Heavy AI Spending Under the SpotlightThe company expects to invest $190 billion in infrastructure, with much of the spending directed toward AI-focused data centers, advanced chips and cloud infrastructure, per Yahoo Finance.
Management argues that today's spending is laying the foundation for substantially higher future revenues. However, investors will closely watch management's commentary on fiscal 2027 capital expenditure plans to determine whether AI spending is beginning to moderate.
Zacks Consensus Estimates for MicrosoftThe Zacks Consensus Estimate for Microsoft's fourth-quarter earnings per share (EPS) stands at $4.21, suggesting 15.34% year-over-year growth. For the fiscal year, the consensus EPS estimate stands at $17.32, indicating a 26.98% year-over-year rally.
The Zacks Consensus Estimate for revenues stands at $87.44 billion, implying a 14.39% year-over-year rise. For the fiscal year, the consensus estimate for revenues is pegged at $329.26 billion, suggesting year-over-year growth of 16.87%.
In a nutshell, Microsoft could benefit from AI momentum, Copilot adoption and Azure cloud expansion. Strong Microsoft 365 Commercial demand continues to drive revenue growth. However, AI ROI concerns may act as a headwind for the stock.
Microsoft-Heavy ETFs in FocusMicrosoft remains one of the largest holdings across numerous technology and AI-focused ETFs. A strong earnings report can provide a boost to relevant ETFs.
Conversely, disappointing Azure growth or further increases in AI spending without clear evidence of improving profitability could pressure both Microsoft shares, and the broader AI and technology ETF universe.
Global X PureCap MSCI Information Technology ETF (GXPT - Free Report) is designed to give investors exposure to the U.S. information technology sector. Microsoft holds a weightage of 12.03% in this fund.
GXPT has risen 15.9% from the start of the year till July 24, 2026, with an expense ratio of 0.15% and traded a volume of 100,000 shares. It has an AUM base of $134.9 million and it holds a Zacks ETF Rank #2 (Buy).
Vanguard Information Technology (VGT - Free Report) is one of the popular U.S. technology ETFs, offering low-cost exposure to a wide range of IT companies with a strong emphasis on semiconductors, hardware and software.
Microsoft holds a weightage of 8.28% in this fund. VGT has assets under management worth $138,694 million, along with an expense ratio of 0.09%. The fund trades an average volume of 5,000,000 shares. The fund has risen about 20% year to date. It holds Zacks ETF #1 (Strong Buy).
Amplify Video Game Leaders ETF(GAMR - Free Report) invests in companies across the global video gaming ecosystem that includes companies involved in game development, GPUs, gaming platforms, mobile games, hardware and metaverse-related technologies.
Microsoft holds a weightage of 9.62% in this fund. The fund has an expense ratio of 0.59% and trades an average volume of 1,141 shares with assets under management worth $36.8 million.
SummaryAll eyes turn to big tech names this week: Apple, Amazon, Meta and Microsoft.Q2 S&P 500 profit growth currently stands at 37.9% with 27% of companies having reported.Potential earnings surprises this week: Illinois Tool Works, Xylem, Vulcan Materials, GoDaddy, and more. Ole_CNX/iStock via Getty Images
Capex Cracks and Mainframe Slumps: What Early Q2 Reports Tell Us About the AI Trade As the Q2 earnings season kicks into high gear, market sentiment around the AI trade is undergoing a critical sanity check. Alphabet’s (
Tensions between the U.S. and Iran finally showed some signs of cooling, sending crude oil prices plunging and futures surging. Kenny Polcari explains how the new developments pave the Fed's path ahead as the FOMC meets on interest rates later this week.
Microsoft Corporation trades at a 22.8x forward P/E, a multi-year low, reflecting a 25% stock decline despite strong fundamentals. MSFT's free cash flow is falling due to $190B in AI capex, while Copilot monetization remains slow with only 3% corporate adoption. The Hold rating for MSFT is justified by the unresolved gap between heavy AI investment and lagging Copilot revenue, with July 29 earnings as a key catalyst.
NEW YORK, July 27, 2026 (GLOBE NEWSWIRE) -- Levi & Korsinsky, LLP reminds purchasers of Microsoft Corporation (NASDAQ: MSFT) securities of a pending securities class action.
THE CASE: A class action seeks to recover damages for investors who purchased Microsoft securities between May 1, 2025 and January 28, 2026.
YOUR OPTIONS: You may be entitled to compensation without payment of any out-of-pocket fees. Find out if you qualify for recovery or contact Joseph E. Levi, Esq. at [email protected] or (212) 363-7500.
Microsoft shares traded above $550 during the Class Period as the Company promoted Copilot as a transformative enterprise AI product with "best-in-class" capabilities. The lead plaintiff deadline is August 11, 2026.
How an Enterprise AI Product Generates Revenue
An enterprise software company cannot sustain premium pricing for AI-powered productivity tools unless those tools deliver measurable workflow improvements, integrate seamlessly with existing systems, and retain users after initial deployment. Microsoft's Copilot family of products was positioned as exactly this kind of tool, embedded across Word, Excel, PowerPoint, Outlook, and Teams, and sold through paid "seats" to businesses worldwide. Management claimed Copilot was the "fastest-growing M365 portfolio product" ever, with paid commercial seats exceeding 430 million and adoption by over 90% of the Fortune 500.
The lawsuit contends that behind these adoption figures, Copilot suffered from fundamental operational failures that undermined its commercial viability.
Alleged Copilot Product Deficiencies by Category
The action claims Microsoft failed to disclose that Copilot experienced serious problems across multiple operational dimensions:
Brand positioning failures: Copilot's identity was fragmented across dozens of product versions with different features and capabilities, confusing both enterprise buyers and end usersUser experience deficiencies: The product allegedly failed to meet baseline expectations for generative AI writing, analysis, and content creation that management called "table stakes"Data siloing problems: Despite touting "Work IQ" as a differentiator that understood users' work context, Copilot allegedly could not effectively integrate data across Microsoft's own application ecosystemComputational capacity constraints: Microsoft was increasing total AI capacity by 80% and doubling its data center footprint, yet the filing asserts capacity remained insufficient to deliver consistent Copilot performanceInteroperability breakdowns: Copilot's integration with third-party ISV agents and enterprise workflows allegedly fell short of the seamless orchestration management described at investor conferences The Operational Gap Between Claims and Alleged Reality
As detailed in the action, management portrayed Copilot as saving employees an average of 46 minutes daily at one major deployment and generating over 30 million employee interactions in six months at another. The complaint asserts these cherry-picked examples masked systemic product shortcomings that threatened the sustainability of seat growth and ARPU expansion that drove Microsoft's AI revenue narrative.
The filing states that organizational problems within Microsoft's AI division compounded these product-level issues, creating internal friction that slowed Copilot's development and deployment capabilities even as management publicly claimed innovation was "accelerating rapidly."
Start your claim now or call (212) 363-7500.
"The complaint raises serious questions about whether investors received accurate information about the operational readiness of Microsoft's flagship AI product during a period when the Company was asking the market to value it as an AI leader," stated Joseph E. Levi, Esq.
Investors have until August 11, 2026 to seek lead plaintiff status.
Levi & Korsinsky, LLP -- Top 50 securities litigation firm (ISS, seven consecutive years). Over 70 professionals. Hundreds of millions recovered.
Frequently Asked Questions About the MSFT Lawsuit
Q: Who is eligible to join the MSFT investor lawsuit? A: Investors who purchased MSFT stock or securities between May 1, 2025 and January 28, 2026 and suffered financial losses may be eligible. Eligibility is based on purchase date and documented losses, not on whether you still hold the shares.
Q: What specific misstatements does the MSFT lawsuit allege? A: The complaint alleges Microsoft made materially false or misleading statements regarding the success, adoption, and operational performance of its Copilot AI products while concealing significant brand positioning, data siloing, computational capacity, and interoperability problems. When the true state was revealed, the stock price declined.
Q: What do MSFT investors need to do right now? A: Gather brokerage records including purchase dates, share quantities, and prices paid. Contact Levi & Korsinsky for a free, no-obligation evaluation at [email protected] or (212) 363-7500. No immediate action is required to remain eligible as a class member.
Q: What if I already sold my MSFT shares -- can I still recover losses? A: Yes. Eligibility is based on when you purchased, not whether you still hold them. Investors who bought during the class period and sold at a loss may still participate.
Q: Do I need to go to court or give testimony? A: No. The overwhelming majority of class members never appear in court or give depositions. You submit a claim form to receive your portion of recovery.
Q: What does it cost me to participate? A: Nothing. Securities class actions are handled on a pure contingency basis. No upfront fees, no retainer, no out-of-pocket costs.
CONTACT:
Levi & Korsinsky, LLP
Joseph E. Levi, Esq.
Ed Korsinsky, Esq.
33 Whitehall Street, 27th Floor
New York, NY 10004 [email protected]
Tel: (212) 363-7500
Fax: (212) 363-7171
NEW YORK, July 27, 2026 (GLOBE NEWSWIRE) -- Leading securities law firm Bleichmar Fonti & Auld LLP announces that a class action lawsuit has been filed against Microsoft Corporation (NASDAQ:MSFT) and certain of the Company’s senior executives for securities fraud after its significant stock drop resulting from potential violations of the federal securities laws.
If you invested in Microsoft, you are encouraged to obtain additional information by visiting: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
Key Details of the Microsoft ($MSFT) Class Action:
Lead Plaintiff Deadline: August 11, 2026Alleged Misconduct: Securities fraud alleging that Microsoft misled investors regarding its Azure cloud computing platform and AI chatbot CopilotStock Drop: January 28, 2026 – 10% Stock DropCourt: U.S. District Court for the Western District of WashingtonAction: Contact BFA Law to discuss your rights Investors have until August 11, 2026 to ask the Court to be appointed to lead the case. The complaint asserts securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of investors in Microsoft common stock. The class action is pending in the U.S. District Court for the Western District of Washington. It is captioned City of St. Clair Shores Police and Fire Retirement System, et al., No. 26-cv-02071.
Why is Microsoft Being Sued for Securities Fraud?
Microsoft is a multinational technology company that develops software, cloud services, and devices. In recent years, Microsoft’s cloud computing platform named Azure has been Microsoft’s main growth driver. A key reason for Azure’s recent growth is Microsoft’s multi-billion-dollar investment into AI, including the development of its own generative AI chatbot named Copilot.
According to the complaint, during the relevant period, Microsoft consistently touted Copilot’s best-in-class capabilities, which purportedly drove widespread and growing user adoption. Copilot’s apparent success allowed Microsoft to report surging Azure-related revenue.
As alleged, in truth, Copilot suffered from severe functionality issues that caused user adoption to decline and put Microsoft’s Azure revenue at risk.
Why did Microsoft’s Stock Drop?
On January 28, 2026, Microsoft announced disappointing 2Q 2026 financial results and that Azure growth had slowed suddenly. Microsoft also allegedly revealed for the first time that the number of Microsoft 365 Copilot premium customers totaled only 15 million, materially below analyst estimates.
This news caused the price of Microsoft common stock to decline $48.13 per share, or 10%, from $481.63 per share on January 28, 2026, to $433.50 per share on January 29, 2026.
Additionally, on February 3, 2026, The Wall Street Journal reported in an article titled “Microsoft’s Pivotal AI Product Is Running Into Big Problems” that severe challenges and functionality issues had plagued Copilot, causing the application to lose market share. Specifically, The Wall Street Journal reported that “[c]onfusing brand positioning and interoperability problems have frustrated users.”
Click here for more information: https://www.bfalaw.com/cases/microsoft-class-action-lawsuit.
What Can You Do?
If you invested in Microsoft, you may have legal options and are encouraged to submit your information to the firm.
All representation is on a contingency fee basis; there is no cost to you. Shareholders are not responsible for any court costs or expenses of litigation. The firm will seek court approval for any potential fees and expenses.
BFA is a leading international law firm representing plaintiffs in securities class actions and shareholder litigation. It has been named a top plaintiff law firm by Chambers USA, The Legal 500, and ISS SCAS, and its attorneys have been named “Elite Trial Lawyers” by the National Law Journal, “Litigation Stars” by Benchmark Litigation, among the top “500 Leading Plaintiff Financial Lawyers” by Lawdragon, “Titans of the Plaintiffs’ Bar” by Law360 and “SuperLawyers” by Thomson Reuters.
Most recently, The Legal 500 awarded BFA the most client satisfaction accolades of any plaintiff’s securities litigation law firm, with clients noting: “[t]here is no better service provider in the practice area,” “[t]he interest of the client is always front and center,” and “[t]here isn’t a better firm in this space.” One testimonial described the firm as “nimble and entrepreneurial,” with a “relentless focus on adding value for clients.”
Among its recent notable successes, BFA recovered over $900 million in value from Tesla, Inc.’s Board of Directors, as well as $420 million from Teva Pharmaceutical Ind. Ltd.
For more information about BFA and its attorneys, please visit https://www.bfalaw.com.
Nový týden nabídne celou řadu kvartálních výsledků. Ze společností obchodujících se na pražské burze bude reportovat Komerční banka, Erste a CTP. Ze zahraničních titulů bude pozornost upřena především na technologické giganty Microsoft, Metu, Amazon a Apple.
Přehled vybraných společností reportujících své výsledky v tomto týdnu (zdroj: síť X - Earnings Whispers)
Pondělí (27. 7.) Německo (před trhem): Hochtief
Eurozóna (po trhu): LVMH
Úterý (28. 7.) USA (před trhem): Coca-Cola, Boeing, UPS, Sherwin-Williams, American Tower Corp, PayPal
USA (po trhu): Mondelez International, Visa
Eurozóna (před trhem): Safran, Air Liquide, EssilorLuxottica
Německo (před trhem): Mercedes-Benz, TeamViewer
Středa (29. 7.) USA (před trhem): Procter&Gamble, SoFi
USA (po trhu): Meta Platforms, Microsoft, Qualcomm, Starbucks, Lam Research, General Dynamics
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Old-school whiteboard interviews are a big part of this startup's hiring. Aaron Epstein/PEACOCK via Getty Images Mercor's interview process is less vibe coding, more whiteboarding.
On an episode of the "20VC" podcast released on Saturday, Mercor's head of product, Osvald Nitski, said that the AI training company has moved away from take-home assignments that can be completed with AI.
"We'll do one round where we find out if the person is familiar with AI tools," he said. "We care a lot about being able to set up good experiments and understanding statistics, having good judgment, and then systems design as well," he said, referring to what is asked in whiteboarding sessions.
Whiteboard interviews, where candidates draw and explain their thinking process, became an industry gold standard in the 2010s and are part of standard technical interviews at companies like Google, Meta, and Microsoft.
On the podcast, Nitski, who joined the $10 billion startup last year, said that AI makes it very easy to "offload" a lot of decision-making.
"We want to make sure that people still have the ability to have good judgment and know what they're doing and not just, like, regurgitate what comes out of Claude," he said.
While Mercor uses AI to screen candidates for its talent marketplace, its full-time job interview process contradicts what most of Silicon Valley is increasingly adopting.
For one, work trials and take-home assessments, which Nitski said Mercor has moved away from, are quickly replacing traditional interviews, such as culture-fit screenings and whiteboarding sessions. AI coding startups like Lovable, Cursor, and Kilo say work experiments are a one-shot way to gauge whether someone has the technical and soft skills they want to see.
Mercor's low-AI interview strategy is also unique compared to peers.
Over the last few months, Business Insider reported that Big Tech companies such as Google, Microsoft-owned LinkedIn, and Cisco are changing their interview to allow candidates to use AI. Some tech startups are giving candidates full access to AI tools and coding assistants.
Emily Cohen, who heads people and operations at AI coding startup Cognition, said the company has changed its interview process to account for AI and vibe coding.
"I guess this is like asking a kid to take a math test without a calculator," she said about not allowing AI use in interviews. "For the bulk of building something similar to what you would do on the role, you can and should use AI tools."
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Po 13 dnech po sobě jdoucích útoků, jejichž cílem bylo omezit schopnost Íránu útočit na komerční lodní dopravu, USA pozastavily útoky proti Íránu. Teherán následně zastavil odvetné akce a vedl jednání s Ománem o Hormuzském průlivu. Zmírnění napětí vedlo k propadu cen ropy, Brent se obchoduje lehce pod 91 USD (-6 %). Asijské indexy tak začaly nový týden růstově (+0,8 %) a futures kontrakty pro zámoří nyní posilují podobně. Evropa by tedy měla zahájit pondělní obchodování v kladných úrovních kolem +1 %. V Asii vynikal při svém debutu po IPO čínský výrobce čipů CXMT (+535 %). V průběhu týdne budou investoři sledovat středeční zasedání FEDu, zdali zvýší úrokové sazby po nedávném nárůstu cen ropy. Z výsledků bude zajímavý např. Microsoft. Praha v pátek rostla (PX +0,7 %), z výsledků Moneta (+1,9 %) profitovala zřejmě i KB (+1,7 %). Domácí trh by dnes mohl otvírat s pozitivním sentimentem růstově i dnes.
New York, New York--(Newsfile Corp. - July 26, 2026) - WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of common stock of Microsoft Corporation (NASDAQ: MSFT) between May 1, 2025 and January 28, 2026, inclusive (the "Class Period"), of the important August 11, 2026 lead plaintiff deadline.
SO WHAT: If you purchased Microsoft common stock during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.
WHAT TO DO NEXT: To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than August 11, 2026. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.
WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Many of these firms do not actually handle securities class actions, but are merely middlemen that refer clients or partner with law firms that actually litigate the cases. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered billions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs' Bar. Many of the firm's attorneys have been recognized by Lawdragon and Super Lawyers.
DETAILS OF THE CASE: According to the lawsuit, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Microsoft's Copilot family of products had experienced significant brand positioning, user experience, usage, data siloing, computational capacity, organizational, and interoperability problems; (2) Microsoft's flagship proprietary AI model ranked well below competitors on a number of benchmark tests; (3) Microsoft needed to increase by billions of dollars its capital expenditures and divert graphics processing unit ("GPU") and central processing unit ("CPU") capacity away from fulfilling demand for its profitable Azure services in order to improve the competitive positioning of its critical Copilot family of products and increase its AI-related research and development ("R&D"); and (4) as a result, Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and Microsoft's Copilot offerings had lost market share to rival products, a trend that was increasing. When the true details entered the market, the lawsuit claims that investors suffered damages.
To join the Microsoft class action, go to https://rosenlegal.com/cases/microsoft-corporation/join or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor's ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.
Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm, on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm/.
Attorney Advertising. Prior results do not guarantee a similar outcome.
-------------------------------
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/306607
Source: The Rosen Law Firm PA
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It’s been a tough year for Microsoft (MSFT +0.02%) shareholders. The stock, typically viewed as one of the safest plays in the entire stock market, has lost nearly a fifth of its value.
Concerns about elevated capital expenditures on artificial intelligence infrastructure and a software armageddon have extracted their pound of flesh.
Microsoft will have the opportunity to prove the naysayers wrong when it reports its 2026 fiscal fourth-quarter earnings after the market closes on Wednesday, July 29.
Following the results, CEO Satya Nadella and the rest of Microsoft’s senior management will host a live conference call with Wall Street analysts to discuss the results.
The earnings report could send the stock soaring. Here’s why.
Image source: Motley Fool.
The chance to prove the company’s AI strategy is workingMicrosoft’s stock has sold off for a few reasons.
The company has guided for $190 billion in capital expenditures in calendar year 2026, largely for AI infrastructure.
Investors are also concerned that the company’s AI digital assistant Copilot is not gaining traction and that Microsoft 365, its suite of office tools that powers the business world, could eventually be vulnerable to AI-made alternatives.
All the concerns are valid, of course. Copilot had about 20 million paid enterprise seats on Microsoft’s last earnings call, despite the company’s 450 million-plus Microsoft 365 subscribers.
Morgan Stanley analyst Adam Wood thinks Microsoft has a good opportunity on the upcoming earnings release to prove that its AI strategy is making progress.
Wood expects Azure, Microsoft’s cloud business benefitting from AI, to show accelerated growth over the next few quarters and for Copilot adoption to pick up steam as well.
Wood sees tremendous upside for Microsoft, particularly if Azure growth and Copilot adoption drive growth in Microsoft 365. Wood has a $795 price target as his bull case, which would imply more than a double from current levels.
Long-term investors can buy the stockI do think long-term investors can buy the stock. While Microsoft could soar following its upcoming earnings results, investors should still be careful about trading around a near-term earnings event.
Other large AI companies that have reported high capex guidance have experienced significant sell-offs, and this poses a potential risk for Microsoft. The company could guide for higher-than-expected capex next quarter or in the calendar year.
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It’s also possible Microsoft sells off if Azure revenue disappoints, Copilot adoption fails to impress the market, or Microsoft 365 subscriber growth comes in weak.
That said, negative sentiment surrounding the stock could also send it soaring on a strong earnings print. Furthermore, I like the long-term setup for Microsoft, which trades around 23 times trailing earnings, well below its five-year average of roughly 32.5.
Now, it’s true that Copilot may never be the powerhouse that Claude or ChatGPT is in terms of total users. AI will also undoubtedly make software solutions easier to build, eroding the moat of software players that can’t adapt quickly enough.
That said, I do think there is a very good chance that Microsoft can position Copilot to support Microsoft 365 growth and maintain its dominance in the business world with its suite of office tools.
Furthermore, Azure revenue has been growing at an annual rate of around 40% in recent quarters, indicating that high AI investment is paying off on this front.
Microsoft is also very likely to survive any major sell-off or correction in AI. Trading at an undemanding multiple, I do see the stock as a good long-term bet.
