Microsoft stock (MSFT) steps into its Fiscal Q3 earnings this Wednesday, April 30. Analysts expect revenue to land at $68.44 billion, up over 10% from last year, while earnings per share are forecast at $3.21. This quarter will offer a critical check-in on Microsoft’s AI integration across Azure and Office 365, and how those efforts are shaping its position in the cloud market.
Cloud and AI Power Microsoft’s Growth Narrative
At the core of Microsoft’s story is the Intelligent Cloud segment. This division, home to Azure, is projected to generate $26.13 billion in revenue, a healthy 18% jump from a year ago. Azure remains a vital cog in Microsoft’s growth machine. But investors aren’t just looking at revenue. They want to know how AI spending is affecting margins.
Microsoft has been racing to integrate AI tools like Copilot across its Office 365 suite. The company charges $30 per user for Copilot’s premium AI features, a move that could significantly boost profit margins. But these products are still in the early adoption phase, so investors will want to hear how uptake is progressing.
Wedbush analysts say it bluntly: “The monetization opportunities around deploying AI in the cloud is a transformational opportunity.” Microsoft is pouring resources into AI. But building this kind of technology takes serious spending.
Tariffs Add Uncertainty to Microsoft’s Outlook
Microsoft might not sell gadgets like Amazon (AMZN), but tariffs on Chinese imports could still complicate the picture. Higher costs across the tech supply chain could squeeze margins, even for a software giant. The company sources hardware components for its Surface laptops and Xbox consoles, both of which could feel some tariff pain. While software remains Microsoft’s bread and butter, these smaller segments contribute to overall revenue.
Is Microsoft a Buy, Hold, or Sell?
Despite the potential potholes, Wall Street analysts remain steadfast. According to TipRanks, MSFT stock has a consensus Strong Buy rating among 35 Wall Street analysts. That rating is based on 31 Buys and four Holds assigned in the last three months. The average Microsoft price target of $484.86 implies a 25% upside from current levels.
