All eyes are on Big Tech this week as earnings roll in – and Microsoft (NASDAQ:MSFT) is one of the headliners. The tech giant is set to report its fiscal second-quarter (December quarter) results on Wednesday after the market closes.
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The report comes at a time when investor confidence in AI spending has begun to wobble, with Microsoft shares down 17% since its last earnings release in late October. While the company delivered a solid quarter then, its warning of sharply higher FY26 capital expenditures raised questions about just how aggressively it plans to build out its AI infrastructure.
Looking ahead to the print, Mizuho analyst Gregg Moskowitz says his Azure checks were “generally good” this quarter. “While there were some reports of slightly muted budget flush activity, we also picked up continued healthy cloud migrations, and AI spending remains very strong,” the analyst went on to say.
Overall, the analyst expects F2Q Azure growth to exceed the company’s 37% year-over-year constant currency guide. At the same time, Moskowitz’s checks continue to point to steady adoption of Microsoft 365 Copilot, though the revenue contribution there remains modest.
The analyst is calling for F2Q revenue of $80.175 billion, below consensus at $80.309 billion but above Microsoft’s guide for ~$80.050 billion. Moskowitz has EPS of $3.96 vs. the Street at $3.92.
Within the revenue haul, Moskowitz forecasts PBP (productivity and business processes) revenue of approximately $33.5 billion, representing 13.5% year-over-year growth, yet believes results could come in “slightly better.” The analyst models Intelligent Cloud revenue of $32.5 billion, up 27% y/y, and here also sees potential for slight upside. Additionally, Moskowitz estimates MPC (more personal computing) revenue of roughly $14.3 billion, down 3% y/y, yet anticipates this segment will deliver the largest percentage upside relative to his model. Within MPC, PC unit growth remained strong this quarter at 9.6% y/y, according to IDC, essentially flat quarter-over-quarter and “roughly in line” with his expectations. Finally, Moskowitz projects non-GAAP operating margins of 45.3%, roughly flat versus the year-ago period, though he sees room for some margin upside.
On the general AI front, Microsoft CEO Satya Nadella recently emphasized progress toward creating more meaningful AI value, including a post outlining his perspective on the current “model overhang,” where AI models’ capabilities exceed their practical real-world impact. He also noted that 2026 will be a key year for addressing this gap by prioritizing real-world applications, developing the supporting infrastructure (such as Agent 365), and making careful decisions on allocating limited resources like energy, compute, and talent. Additionally, since appointing Judson Althoff as CEO of the commercial business in October, Nadella has reportedly become significantly more involved in the technical work of improving Microsoft’s products.
As for Moskowitz’s opinion on the stock, the analyst strikes a positive tone: “We remain ever-confident that MSFT’s revenue growth opportunities over the medium-term and beyond are greater than many realize, and we continue to be very bullish on its tangible AI adoption and monetization levers.”
Backing up that optimism, Moskowitz rates Microsoft shares an Outperform (i.e., Buy) and pegs the stock with a $620 price target, implying ~33% upside potential over the next year. (To watch Moskowitz’s track record, click here)
The rest of Wall Street is largely in agreement. The average price target sits slightly higher at $626.14, pointing to about 34% upside. And with 32 Buy ratings versus just 2 Holds, Microsoft earns a resounding Strong Buy consensus rating. (See Microsoft stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.