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Redmond, Washington-based Microsoft Corporation (MSFT) is one the largest software companies in the world. It dominates the PC software market with more than 80% of the market share for operating systems and also provides various market leading business and productivity software. With a market cap of $3.1 trillion, Microsoft employs 228,000 people and operates in 190+ countries across the globe.
The software giant is expected to announce its second-quarter earnings on Tuesday, Feb. 4. Ahead of the event, analysts expect Microsoft to report a profit of $3.13 per share, up 6.8% from $2.93 per share reported in the year-ago quarter. Furthermore, the company has surpassed Wall Street’s bottom-line estimates in each of the past four quarters. Its EPS for the last reported quarter increased 10.4% year-over-year to $3.30, exceeding analysts’ estimates by 7.1%.
For fiscal 2025, analysts expect Microsoft to deliver an EPS of $12.92, up 9.5% from $11.80 in fiscal 2024. While in fiscal 2026, its earnings are expected to surge 14.2% year-over-year to $14.76 per share.
MSFT stock has gained 13.3% over the past 52 weeks, substantially lagging behind the S&P 500 Index’s ($SPX) 24.2% surge and the Technology Select Sector SPDR Fund’s (XLK) 23.9% returns during the same time frame.
Despite crushing analysts’ earnings and topline projections, Microsoft’s stock prices plummeted 6.1% in the trading session after the release of its Q1 results on Oct. 30. The company reported an impressive 16% year-over-year growth in total revenues to $65.6 billion and a robust 10.7% increase in net income to $24.7 billion. Additionally, Microsoft achieved a record EPS of $3.30.
However, Microsoft's guidance for the next quarter fell short of Wall Street’s expectations. The company forecasts Azure's Q2 constant currency revenues to grow by 31% to 32%, down from 34% in Q1, and its Intelligent Cloud segment to grow between 18% and 20%, down from 21%. Furthermore, due to anticipated losses from OpenAI, Microsoft expects its other income and expenses to amount to a negative $1.5 billion. These updates unsettled investor confidence, leading to a massive sell-off.
Nonetheless, analysts remain strongly bullish on the stock’s long-term prospects. MSFT has a consensus “Strong Buy” rating overall. Among the 41 analysts covering the stock, 34 recommend “Strong Buy,” four suggest “Moderate Buy,” and three advise a “Hold” rating. Its mean price target of $508.31 indicates a 19.7% upside potential from current price levels.
