When Microsoft releases its fiscal fourth-quarter results late Tuesday, investors will be looking for continued momentum in its Azure cloud infrastructure business and traction for its Copilot artificial intelligence services. Microsoft stock has been in a slump and could use a positive catalyst.
Also, Wall Street will be scrutinizing Microsoft's capital expenditures amid heightened spending on data center and AI capacity.
Analysts polled by FactSet expect Microsoft to earn $2.93 a share, up 9% year over year, on sales of $64.4 billion, up 15%, in the June quarter. Those figures would mark the second straight quarter of slowing sales growth and the third quarter in a row of decelerating earnings growth.
For the September quarter, analysts expect Microsoft to earn $3.17 a share, up 6% year over year, on sales of $65.1 billion, up 15%.
Microsoft Stock Up Ahead Of Report
On the stock market today, Microsoft stock rose 1.6% to close at 425.27.
On July 5, Microsoft hit a record high of 468.35. But shares tumbled amid an investor rotation out of tech stocks.
On Friday, UBS analyst Karl Keirstead reiterated his buy rating on Microsoft stock with a price target of 520.
"While we typically hear shades of bullishness into Microsoft prints, this time the stock is down 10% since the July 9th large-cap weakness began," Keirstead said in a client note. "And we're hearing from hedge funds that are neutral or short on a 'we see minimal upside' thesis."
Information-technology budgets are tight now, but Azure demand signals are bullish, he said. Microsoft also could see upside from Copilot AI services, especially for Office applications.
Microsoft On Two IBD Stock Lists
TD Cowen analyst Derrick Wood is upbeat about Microsoft's prospects in the face of low expectations.
"Overall, we expect another healthy beat on growth and margins and continue to see Microsoft as best positioned for AI monetization," Wood said in a recent client note. He rates Microsoft stock as buy with a price target of 495.
Microsoft stock is on two IBD lists: Long-Term Leaders and Tech Leaders.
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