Technology giant Microsoft Corporation (NASDAQ:MSFT) hopes to turn the tide on a falling stock price with the company's third-quarter financial results on Wednesday after market close.
Here are the earnings estimates, what experts are saying ahead of the report and key items to watch.
Microsoft Q3 Earnings Estimates
Analysts expect Microsoft to report third-quarter revenue of $81.4 billion, up from $70.07 billion in last year's third quarter, according to Benzinga Pro.
The company beat analyst estimates for revenue in 12 straight quarters. The current estimate would mark a new quarterly record for the company, surpassing the $81.27 billion reported in the second quarter.
Analysts expect Microsoft to report third-quarter earnings per share of $4.07, up from $3.46 in last year's third quarter.
The company has beaten analyst estimates for earnings per share in 15 straight quarters.
What Microsoft Experts Are Saying
Freedom Capital Markets Chief Market Strategist Jay Woods said Microsoft's Azure growth could be the key item to watch, alongside Copilot.
"Microsoft has been under pressure since its October peak, not because the story is broken, but because expectations got ahead of reality," Woods said in a weekly newsletter.
The market expert said Azure growth has been "solid," but isn't enough to fight off investor pressure on software stocks.
"Massive AI spending used to be rewarded, now it has raised concerns about margins and returns."
Woods said Microsoft stock is back to levels from after the last quarterly earnings.
"Software stocks remain out of favor and the market will look to Microsoft to try and change the narrative."
Analysts have been lowering their price targets on Microsoft stock ahead of the quarterly earnings. Here are some recent analyst ratings on Microsoft and their price targets:
- Benchmark: Reiterated Buy rating, with $450 price target
- BMO Capital: Maintained Outperform rating, lowered price target from $575 to $505
- Oppenheimer: Reiterated Outperform rating, lowered price target from $630 to $515
- Guggenheim: Reiterated Buy rating, with $586 price target
- Citigroup: Maintained Buy rating, lowered price target from $635 to $600
- TD Cowen: Maintained Buy rating, lowered price target from $610 to $540
Key Items to Watch
Microsoft's earnings report comes days after it and OpenAI revised their partnership. Microsoft will retain a non-exclusive license to OpenAI's IP through 2032, with OpenAI products launching first on Azure unless Microsoft can't support them. OpenAI also gains flexibility to deploy on other cloud providers.
Shares sold off on news of the amended deal, likely making the deal a key topic for management on Wednesday. Investors and analysts could get a clearer picture of what the new deal means for Microsoft's current fiscal year and future fiscal years and why the deal was changed.
While Microsoft's stock price has fallen this year, the company’s last earnings report showed revenue up 21% year-over-year and strength across business segments. Overall, Cloud revenue was $51.5 billion, up 26% year-over-year. The company reported $625 billion in commercial remaining performance obligations.
Investors could also get more details on AI monetization and future plans.
Microsoft CEO Satya Nadella stressed that the company was only in the early stages of AI adoption after the second-quarter results.
Microsoft is one of several Magnificent Seven stocks reporting earnings this week, putting pressure on the overall technology sector. The company is a top holding of some of the largest ETFs by weighting.
In the SPDR S&P 500 ETF Trust (NYSE:SPY), Microsoft is the third-largest holding at 5.1% of assets. In the SPDR Dow Jones Industrial Average ETF (NYSE:DIA), Microsoft is the third-largest holding at 5.3% of assets.
The company's financial results and subsequent stock reaction could create volatility in the S&P 500 and Dow Jones Industrial Average, given its key weighting in both indexes.
Price Action
Microsoft stock is up 0.4% to $426.45 on Tuesday versus a 52-week trading range of $356.28 to $555.45. Its stock price is down 9.8% year-to-date in 2026.
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