Microsoft (MSFT) is set to report Q2 earnings on Wednesday, January 28, after market close, with analysts expecting another solid quarter driven by continued cloud and enterprise demand.
Wall Street forecasts EPS of $3.92 and revenue of $80.28B, representing 15.3% year-over-year growth. Earnings expectations have trended higher in recent months, with 26 upward EPS revisions versus just 3 downward over the past three months. Revenue estimates have been more mixed but still positive overall, with 20 upward revisions and 16 downward.
The revision trends suggest analysts remain largely confident heading into the report, with results likely to hinge on cloud performance and guidance for the remainder of the fiscal year.
On ratings, Microsoft holds a Strong Buy consensus on Wall Street, with an average price target of $616, implying about 28.6% upside. In contrast, the Seeking Alpha Quant model rates the stock Hold, citing valuation concerns. Momentum has been mixed, with shares up 10.4% over the past year, lagging the S&P 500’s 16% gain.
Despite reporting better-than-expected fiscal Q1 results in late October, the stock is down 13% since then, leaving investors debating whether the pullback presents a buying opportunity at current levels.
During its last earnings call, Microsoft said it expects higher spending in fiscal 2026 than previously forecast, with total spending rising sequentially and growing faster than in fiscal 2025. Management pointed to increased investment in GPUs and CPUs as key drivers.
That backdrop puts added focus on this earnings report, as investors look for signs that Microsoft’s heavy AI investments are beginning to deliver tangible returns.
Bullish view
“Microsoft remains in a position of strength with a substantial RPO for cloud compute capacity, supporting the firm’s data center investment cycle,” SA analyst Michael Del Monte said.
Cautious view
SA analyst Summit Research said Microsoft’s long-term AI growth story remains intact but warned of rising near-term risks tied to execution and heavy investment spending. “MSFT stock’s extended pullback since late October underscores growing investor concern over AI ROI visibility, particularly as rising capex, infrastructure supply bottlenecks, and energy-related cost headwinds weigh on profitability prospects.”