Microsoft (MSFT) Earnings Preview: AI and Azure in Focus

Microsoft Corp. faces a pivotal moment as it prepares to report fiscal Q2 2026 earnings after Wednesday's close. Analysts project $3.91 EPS and $80.28 billion revenue, marking 21% and 15% year-over-year growth respectively. The tech giant carries a nine-quarter streak of earnings beats into this report.

Azure's 40% revenue growth last quarter—fueled by AI adoption through ChatGPT, Grok, and other models—remains the crown jewel. Despite software sector headwinds prompting lowered price targets, 28.5x forward P/E sits below its 31.5x five-year average, suggesting relative value.

Options markets price in a 5.4% post-earnings swing. The stock's 7% 2025 gain contrasts with its 14% pullback from October highs, creating tension between Microsoft's AI leadership and broader tech valuation pressures.