Microsoft (NASDAQ:MSFT) Issues Earnings Results

Key Points

• Quarterly beat: Microsoft reported adjusted EPS of $4.27 (vs. $4.04 expected) and revenue of $82.9B (+18.3% YoY), and guided Q4 revenue to $86.7B–$87.8B while expecting FY27 double‑digit revenue and operating income growth despite near‑term margin pressure.
• AI and cloud momentum: Microsoft Cloud revenue reached a record $54.5B (up 29% YoY) and the company says its AI business surpassed a $37B ARR, with Microsoft 365 Copilot exceeding 20M paid seats.
• Massive capex ramp: Capital spending is accelerating (Q3 CapEx $31.9B, Q4 guidance >$40B and ~$190B expected in calendar 2026), which will pressure near‑term margins and reflects ongoing supply constraints for AI hardware.

Microsoft (NASDAQ:MSFT - Get Free Report) posted its earnings results on Wednesday. The software giant reported $4.27 EPS for the quarter, beating analysts' consensus estimates of $4.04 by $0.23, FiscalAI reports. The business had revenue of $82.89 billion for the quarter, compared to the consensus estimate of $81.30 billion. Microsoft had a net margin of 39.04% and a return on equity of 32.34%. The company's revenue for the quarter was up 18.3% on a year-over-year basis. During the same quarter last year, the firm posted $3.46 EPS.

Here are the key takeaways from Microsoft's conference call:

• Microsoft Cloud revenue was a record $54.5B (up 29% YoY) and the company says its AI business surpassed $37B ARR (up 123% YoY), with Microsoft 365 Copilot now over 20M paid seats and seat adds +250% YoY.
• Capital spending is ramping materially — Q3 CapEx was $31.9B, Q4 guidance >$40B and Microsoft expects roughly $190B of CapEx in calendar 2026 — the company says two‑thirds of near‑term spend is short‑lived assets (GPUs/CPUs) and expects supply constraints to persist through 2026.
• Quarterly results beat expectations: revenue $82.9B (+18% YoY) and adjusted EPS $4.27 (+21%); Q4 revenue guided to $86.7B–$87.8B (13%–15% growth) while management expects FY27 double‑digit revenue and operating income growth despite near‑term margin pressure from AI investments.
• Microsoft highlighted infrastructure and product advantages — new capacity additions (1 GW this quarter, Fairwater DC early), first‑party silicon (Maia 200 live, Cobalt CPU in ~half of regions) and faster GPU deployment, plus strong adoption of Foundry/Fabric (35k Fabric customers, Cosmos DB +50% YoY) that management says will drive efficiency and differentiation.

Microsoft Stock Performance

Shares of MSFT traded down $4.79 during trading hours on Wednesday, hitting $424.46. The stock had a trading volume of 33,702,033 shares, compared to its average volume of 35,436,535. The company has a debt-to-equity ratio of 0.09, a quick ratio of 1.38 and a current ratio of 1.39. The firm has a 50-day moving average price of $395.09 and a 200 day moving average price of $448.65. Microsoft has a fifty-two week low of $356.28 and a fifty-two week high of $555.45. The firm has a market capitalization of $3.15 trillion, a price-to-earnings ratio of 26.55, a PEG ratio of 1.60 and a beta of 1.11.

Microsoft Dividend Announcement

The company also recently announced a quarterly dividend, which will be paid on Thursday, June 11th. Investors of record on Thursday, May 21st will be paid a $0.91 dividend. This represents a $3.64 annualized dividend and a dividend yield of 0.9%. The ex-dividend date is Thursday, May 21st. Microsoft's payout ratio is currently 22.76%.

Wall Street Analyst Weigh In

MSFT has been the topic of a number of research reports. Melius Research set a $430.00 target price on shares of Microsoft in a research report on Monday, February 9th. Jefferies Financial Group reaffirmed a "buy" rating on shares of Microsoft in a research report on Friday, April 24th. Wells Fargo & Company cut their price objective on shares of Microsoft from $630.00 to $615.00 and set an "overweight" rating on the stock in a research report on Thursday, January 29th. Robert W. Baird lowered their target price on shares of Microsoft from $540.00 to $500.00 and set an "outperform" rating for the company in a research note on Wednesday, April 15th. Finally, Wolfe Research cut their price target on shares of Microsoft from $625.00 to $530.00 and set an "outperform" rating on the stock in a report on Thursday, January 29th. Two research analysts have rated the stock with a Strong Buy rating, thirty-eight have assigned a Buy rating and five have issued a Hold rating to the company's stock. Based on data from MarketBeat.com, Microsoft presently has an average rating of "Moderate Buy" and a consensus target price of $563.72.

More Microsoft News

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Q3 EPS beat and revenue roughly in line — Microsoft reported $4.27 EPS, ahead of consensus, and revenue near Street expectations, which helped validate the company’s growth trajectory. Microsoft (MSFT) Beats Q3 Earnings and Revenue Estimates
• Positive Sentiment: Azure / Intelligent Cloud acceleration: management said cloud growth accelerated (company commentary and charts show mid-to-high‑30s/40% growth in Azure), easing investor worries that AI spending isn’t yet translating to demand. Microsoft tops Wall Street expectations, reports accelerating Azure growth and $37B AI run rate
• Positive Sentiment: Copilot adoption and monetization showing traction — Microsoft reported over 20M paid Copilot users with rising engagement, supporting future software/recurring-revenue upside. Microsoft says it has over 20M paid Copilot users
• Neutral Sentiment: Guidance roughly in line — Q4 revenue guidance was near consensus, so the company isn’t signaling an immediate downshift, but investors will watch next‑quarter detail for AI margin leverage. Press release / slide deck
• Neutral Sentiment: LinkedIn AI products on revenue track — Microsoft said LinkedIn hiring agents could reach ~$450M in annual revenue, a niche but tangible AI monetization path. LinkedIn's AI hiring agents on track for $450 million
• Negative Sentiment: CapEx surge and margin pressure — disclosures and third‑party summaries show capex rose sharply (large spend on data centers/AI hardware), which squeezes near‑term margins and fuels investor concern about ROI timing. Q3 earnings: capex surges (Quiver)
• Negative Sentiment: Partnership & competitive noise — OpenAI’s revised terms (non‑exclusive distribution) and the broader partner shifts to rivals like Amazon raise strategic questions about Microsoft’s privileged access and cloud leverage. OpenAI-Microsoft exclusivity reset coverage
• Negative Sentiment: Workforce and restructuring signals — Microsoft expects headcount to decline and has offered voluntary buyouts; that reduces near‑term payroll but underscores cost pressures tied to the AI buildout. Microsoft expects headcount to decrease

Insiders Place Their Bets

In other Microsoft news, EVP Kathleen T. Hogan sold 12,321 shares of the company's stock in a transaction on Friday, March 6th. The shares were sold at an average price of $409.52, for a total transaction of $5,045,695.92. Following the completion of the transaction, the executive vice president directly owned 137,933 shares in the company, valued at approximately $56,486,322.16. This represents a 8.20% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is accessible through this hyperlink. Also, Director John W. Stanton acquired 5,000 shares of Microsoft stock in a transaction on Wednesday, February 18th. The shares were bought at an average price of $397.35 per share, with a total value of $1,986,750.00. Following the completion of the transaction, the director directly owned 83,905 shares of the company's stock, valued at $33,339,651.75. This trade represents a 6.34% increase in their position. The disclosure for this purchase is available in the SEC filing. Corporate insiders own 0.03% of the company's stock.

Hedge Funds Weigh In On Microsoft

Large investors have recently added to or reduced their stakes in the stock. Valley Financial Group Inc. grew its holdings in shares of Microsoft by 38.1% during the fourth quarter. Valley Financial Group Inc. now owns 1,837 shares of the software giant's stock worth $888,000 after buying an additional 507 shares in the last quarter. Strive Financial Group LLC purchased a new stake in shares of Microsoft during the fourth quarter worth $6,104,000. Blue Sparrow LLC DE purchased a new stake in shares of Microsoft during the fourth quarter worth $411,887,000. Mercer Global Advisors Inc. ADV grew its holdings in shares of Microsoft by 10.3% during the fourth quarter. Mercer Global Advisors Inc. ADV now owns 1,975,658 shares of the software giant's stock worth $953,711,000 after buying an additional 184,645 shares in the last quarter. Finally, Blue Chip Partners LLC grew its holdings in shares of Microsoft by 0.6% during the fourth quarter. Blue Chip Partners LLC now owns 100,803 shares of the software giant's stock worth $48,750,000 after buying an additional 593 shares in the last quarter. 71.13% of the stock is currently owned by institutional investors and hedge funds.

Microsoft Company Profile

Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.

Microsoft's product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).

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