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Microsoft heads into Q4 earnings as investors weigh AI spending impact
Investors will be watching whether Microsoft can produce faster Azure growth, with expectations for 2026 capex of $35.2 billion excluding leases.
Microsoft is set to report fourth-quarter earnings after the bell on Wednesday, as investors focus on whether its large AI-related spending is translating into stronger returns. The stock has fallen more than 18% since the start of the year, amid concerns about aggressive capital expenditures, potential pressure on free cash flow, and whether higher investment is driving improved revenue.
The company is also described as capacity-constrained, limiting its ability to meet demand for AI services. That raises the stakes for the earnings print, because investors could resist further increases in spending even if they may help ease constraints.
Wall Street expectations point to Microsoft spending $35.2 billion on capex excluding capital leases, up 106% year over year, according to Bloomberg data cited by Yahoo Finance. BofA Global Research told investors Microsoft would need Azure cloud growth of 39% to 40% or better to help calm concerns, while Cantor said it expects capex growth to slow in fiscal 2027 after running higher than anticipated in fiscal 2026.
Analysts forecast Microsoft to post earnings per share of $4.25 on revenue of $87.7 billion, topping the $3.65 and $76.4 billion it reported in Q4 last year. Estimates also call for Intelligent Cloud revenue of $38.1 billion, a 12% increase, with Azure revenue projected at $39.5 billion, and remaining performance obligations expected to rise 72% to $647.6 billion.