Here’s What Investors Need To Know

Microsoft is slated to report quarterly results after markets close Wednesday, and Wall Street analysts expect another solid showing.

“We view MSFT as the clear front-runner on the enterprise hyper-scale AI front despite increasing competition from Amazon/AWS and Google/GCP,” wrote Wedbush analyst Dan Ives in a note last week.

Analysts expect Microsoft to report adjusted earnings grew 11% to $3.68 per share in the first quarter of its 2026 fiscal year, according to estimates compiled by Visible Alpha. Wall Street is looking for revenue from Azure, Microsoft’s cloud computing platform, to increase by about 38% to around $23 billion, while total revenue is expected to increase 15% to $75.5 billion. 

Analysts Are Bullish on Cloud Growth

Many analysts say anecdotal evidence points to an even stronger quarter than Wall Street is expecting. 

The feedback Deutsche Bank analysts have received from Microsoft customers “reflects an overwhelmingly positive consensus on Microsoft’s fundamental and competitive standing,” they wrote in a note Thursday. Citi analysts also noted their conversations with Microsoft partners were resoundingly positive, with corporate and public customers indicating strong demand for Azure.

Bank of America analysts are forecasting total first-quarter revenue of $77 billion, but expect as much as 1% upside to that estimate, “driven by workload migration to Azure, strength in security and applications.” Wedbush concurred, calling Microsoft’s forecast of 37% Azure growth “relatively conservative.”

AI Investments Will Be In Focus

Microsoft is coming off a very strong earnings report in July, when it beat top- and bottom-line estimates and indicated cloud computing demand continued to outstrip supply. To meet that demand, the company estimated it would spend $30 billion on infrastructure in the most recent quarter.

Microsoft’s infrastructure spending will be one of the most closely watched figures in this week’s results. Its spending on cloud and AI data centers has fueled exponential sales growth at chipmaker Nvidia (NVDA). This week’s earnings from Microsoft and big tech peers Alphabet (GOOG), Amazon (AMZN), and Meta (META) will give Wall Street insight into the strength of the quarter for Nvidia and other AI infrastructure suppliers.

Bank of America analysts expect Microsoft’s full-year capital expenditures will total $125 billion, $10 billion more than the Wall Street consensus. “We are bullish on upward revisions to Microsoft’s CapEx, which would likely be a catalyst for the stock,” the analysts wrote.

Microsoft Stock Is In a Rut

Microsoft shares have treaded water since popping on last quarter’s earnings report. The stock is down about 2% since the end of July, while the Nasdaq Composite is up nearly 10%. 

BofA attributes the underperformance to a shift in “AI infrastructure momentum away from Microsoft (to Oracle),” which last quarter reported a massive jump in orders from Microsoft-backed OpenAI. Saying that infrastructure spending will exceed prior estimates could help Microsoft regain that momentum, according to BofA.

Uncertainty about Microsoft’s relationship with OpenAI has also been an overhang for the stock, according to Deutsche Bank. The two companies last month signed a non-binding memorandum of understanding to extend their partnership, but much remains to be negotiated, including Microsoft’s access to OpenAI’s intellectual property and programming interfaces, as well as how ownership of OpenAI’s for-profit division will be structured. 

“How things may shake out across these key pillars is unclear, but we believe skeptics are underappreciating Microsoft’s strong position to extract value here,” wrote Deutsche Bank’s Brad Zelnick and Bhavin Shah.