TLDR
- Microsoft reports fiscal Q4 earnings on July 29, with Wall Street expecting EPS of $4.24 and revenue of $87.62 billion
- MSFT stock is down ~21% year-to-date, pushing its forward P/E to a 10-year low of 20.61
- BNP Paribas projects Microsoft will spend $262 billion on capex in fiscal 2027, up from $104.3 billion in the first three quarters of fiscal 2026
- Truist analyst Terry Tillman has a Buy rating and $575 price target, calling the negative sentiment “overdone”
- 46 of 51 analysts rate MSFT a Buy, with a mean price target of $544.92 — implying ~42.7% upside
Microsoft heads into its fiscal fourth-quarter earnings report on July 29 with a cloud hanging over it — and that cloud is capital expenditure.
The backdrop isn’t great. Alphabet reported a strong Q2 on July 22, raised its capex forecast by $15 billion to $205 billion, and still saw its stock drop over 6% the next day. Investors are increasingly uneasy about the scale of AI spending across big tech, and Microsoft is next in the hot seat.
MSFT stock currently trades with a forward price-to-earnings ratio of 20.61 — its lowest in a decade. The stock is down about 21% year-to-date, a stark underperformance versus both the S&P 500 and the Roundhill Magnificent Seven ETF (MAGS).
BNP Paribas analyst Stefan Slowinski projects Microsoft will spend $262 billion on capital expenditures in fiscal 2027. That would be a massive jump from the $104.3 billion spent across the first three quarters of fiscal 2026 alone. Despite that, Slowinski remains bullish, forecasting fiscal 2027 revenue growth of 18% — above the Street consensus of 16.8%.
Wall Street expects Q4 EPS of $4.24, up 16% year-over-year. Revenue is forecast to grow roughly 15% to $87.62 billion.
What Analysts Are Saying
Truist analyst Terry Tillman reiterated a Buy rating with a $575 price target heading into earnings. He called the current pullback an “incremental buying opportunity” and said the market’s view on Microsoft’s AI positioning looks “too pessimistic.”
Tillman is betting on continued Azure strength and growing adoption of Copilot driving AI revenue higher. He also expects a shift toward more first-party AI products to boost margins over time.
Oppenheimer’s Brian Schwartz also kept his Buy rating, with a $515 price target. He sees demand as “healthy” and expects Q4 results to show strong AI business performance alongside steady Microsoft 365 growth — though he acknowledged that capex concerns remain a real headwind for the stock.
Of 51 analysts covering MSFT, 46 have Buy ratings. The average price target sits at $544.92, representing about 42.7% upside from current levels.
Microsoft’s Recent Numbers
In fiscal Q3, Microsoft posted revenue of $82.9 billion, up 18% year-over-year. Operating income came in at $34.4 billion, up 20%. EPS of $4.27 beat expectations of $4.07.
The Intelligent Cloud segment — home to Azure — led growth with a 30% jump to $34.7 billion. Productivity and Business Processes, which includes Microsoft 365 and LinkedIn, grew 17% to $35 billion.
The only soft spot was More Personal Computing, which covers Windows, Bing, Surface, and Xbox. That segment dipped 1% to $13.2 billion.
For full-year fiscal 2026, analysts expect EPS of $16.70, up 22.43% from the prior year.
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