Microsoft Earnings: Investors Eye Capex, Azure Growth
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- Microsoft is expected to post $4.24 adjusted EPS on $87.62 billion in revenue for its fiscal fourth quarter ended June 30, per LSEG consensus, implying 14.6% YoY growth that analysts see accelerating to 15.4% in the September quarter.
- Microsoft shares have lost roughly 19% in 2026 as of Tuesday's close, while the S&P 500 has gained 8.5%, as investors compress legacy software stocks over generative AI disruption fears.
- Deutsche Bank flagged "concentration risk" in Microsoft's OpenAI relationship given the rise of open-source models, noting Microsoft said in January that about 45% of its $625 billion in commercial remaining performance obligations were tied to OpenAI.
- Analysts polled by CNBC and StreetAccount are modeling 40% and 40.2% Azure constant-currency growth, the key metric CEO Satya Nadella must defend while balancing compute between Azure cloud customers, research, and Microsoft 365 Copilot.
- Investors want to see whether Microsoft raises its capex and finance-lease guidance for data-center buildouts; Visible Alpha targets $190.5 billion versus Microsoft's April guidance of $190 billion, and Alphabet lifted its 2026 capex range by $15 billion last week.
- During the quarter Microsoft launched a cost-efficient AI coding model, tapped LinkedIn executive Dan Shapero to lead LinkedIn, and cut Xbox Game Pass subscription prices.
- Executives will discuss results and issue guidance on a conference call at 5:30 p.m. ET.
Why it matters: With the stock down 19% YTD against a rising S&P 500, Microsoft needs to convince investors its $190B+ AI infrastructure spend isn't a drag while showing OpenAI dependence won't undercut Azure's ~40% growth — a misstep on capex guidance could deepen the software-sector selloff that's already punished legacy names.
