Microsoft (MSFT) Stock: What Wall Street Expects from Earnings on July 29

TLDR

• Oppenheimer reiterated an Outperform rating on MSFT with a $515 price target
• MSFT stock trades at $397.75, down 19% year-to-date
• Wall Street expects Q4 FY26 EPS of $4.24, up 16% year-over-year, on revenue of ~$87.62 billion
• Elevated capital expenditure remains the key investor concern going into earnings
• Wall Street consensus is Strong Buy with an average price target of $558.86

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Microsoft reports fiscal Q4 2026 earnings on July 29, and Wall Street is cautiously optimistic — but one number keeps coming up: capex.

MSFT stock is trading at $397.75, down 19% year-to-date. Much of that pressure comes from investor unease around Microsoft’s heavy spending on AI infrastructure.

Microsoft Corporation, MSFT

Oppenheimer analyst Brian Schwartz reiterated a Buy rating on MSFT ahead of the print, keeping his price target at $515.

Schwartz described demand as “healthy” but flagged that “Elevated Capex Remains an Overhang for Better Investor Sentiment.” That tension between solid fundamentals and spending concerns is the central story heading into results.

Wall Street is modeling Q4 FY26 EPS of $4.24, a 16% year-over-year increase. Revenue is expected to come in around $87.62 billion, up roughly 15%.

Schwartz’s own estimates are slightly more conservative — $87 billion in revenue and GAAP EPS of $4.16.

AI Demand Looks Solid, But Capex Questions Linger

The analyst’s research points to positive signals across enterprise IT demand and pipeline momentum. He expects Q4 results to show a strong AI business alongside stable M365 revenue growth.

Schwartz also noted that subdued investor expectations — partly shaped by IBM’s recent negative preannouncement and lower software valuations — could actually help MSFT post-earnings. The bar may be lower than it looks.

Still, Schwartz doesn’t expect the Q4 report to resolve concerns around capex efficiency, AI return on investment, or competitive pressure in the market.

He also pushed back on fears that large language model providers will disrupt M365, calling those worries “overstated.”

Street May Be Underestimating FY2027 Spending

One flag Schwartz raised: Wall Street may be too optimistic about Microsoft’s capex trajectory for fiscal 2027.

He believes Microsoft will need to keep spending heavily to expand AI and cloud capacity, meaning the overhang isn’t going away after one quarterly report.

Other analysts remain bullish. Morgan Stanley initiated coverage with an Overweight rating and a $600 price target, based on 16x projected FY2028 GAAP EPS.

Deutsche Bank reiterated a Buy with a $550 target. CLSA also initiated with an Outperform rating and a $535 target, pointing to Azure’s near-40% growth rate.

The overall Wall Street consensus on MSFT is Strong Buy — 35 Buys, one Hold, one Sell. The average price target sits at $558.86, implying roughly 43% upside from current levels.

Microsoft reports on July 29.