Microsoft Q3 Earnings Preview — Can Strong Results Restart the MSFT Stock Rally?
Microsoft is set to report its Q3 earnings on April 29, with analysts expecting EPS of $4.06 and revenue of $81.3 billion. Despite a 12% decline this year due to AI spending and competition, Wall Street remains bullish, projecting a 36% upside. Investors will focus on AI monetization and Azure's growth, as well as the performance of AI tools like Copilot. The key question is how long it will take for heavy AI investments to yield returns.
Microsoft (MSFT) is set to report its fiscal third-quarter results on April 29. Although the stock has recovered some recent losses as big tech shares rallied, it remains about 12% lower for the year, pressured by heavy spending on AI infrastructure and rising competition. MSFT also trades below its historical valuation multiples, but it still needs to prove AI monetization and sustained growth to drive a meaningful re-rating. Despite the recent weakness, Wall Street remains highly bullish, with analysts maintaining a Strong Buy rating and projecting roughly 36% upside from current levels.
For context, Microsoft develops software, cloud services, and AI solutions, including Windows, Office, Azure, and AI tools like Copilot, serving businesses and consumers worldwide.
What to Expect from Microsoft's Q3 Results?
For Q3, analysts expect Microsoft to report earnings per share (EPS) of $4.06 on revenue of $81.3 billion, up from $3.46 per share and $70.1 billion in the same period last year.
Even though revenue and profits are expected to grow year over year, investors will be closely watching Microsoft's AI spending plans. The key question is no longer whether Microsoft can benefit from AI demand, but how long it will take for those heavy AI investments to start paying off.
Overall, Azure remains the most important metric, as investors want proof that cloud growth is staying strong while Microsoft continues to spend heavily on AI infrastructure. Copilot is another key focus, as investors are looking for signs that its AI products are generating real business value. Below is a screenshot showing Microsoft's operating income breakdown across segments over the last few quarters.
