Microsoft (MSFT) Stock Rises Ahead of Wednesday Earnings as Options Point to 5% Swing
Key Takeaways
- •Microsoft stock gained 1.54% on Tuesday, bringing its year-to-date advance to 9%, ahead of fiscal first-quarter earnings scheduled for Wednesday after the U.S. market close.
- •Options traders are pricing a move of roughly 5% in either direction by the end of the week, implying a range of about $500 to $549 measured from Friday's close.
- •Analysts project quarterly revenue of $90.64 billion, up about 17% year over year, with Intelligent Cloud revenue forecast to climb 33% to $41.09 billion and adjusted earnings per share of $4.73 versus $4.13 a year earlier.
- •Microsoft surpassed expectations in its most recent quarter with revenue of $90.01 billion, up 17.7%, and the stock surged 15% in a single session in July following that report.
- •All 13 analysts tracked by Visible Alpha recommend buying the stock, with a mean price target of $614 implying about 17% upside, while Morgan Stanley kept its $600 target and described sentiment as materially improved.
Microsoft (NASDAQ: MSFT) shares climbed 1.54% on Tuesday as investors positioned themselves ahead of the company's fiscal first-quarter earnings report, due Wednesday after the U.S. market close. With the gain, the stock is up 9% so far this year. Attention ahead of the results is focused largely on demand for the company's cloud computing and artificial intelligence offerings.
Options Point to a 5% Move
Options traders are pricing in a swing of roughly 5% in either direction by the end of the week. Measured from Friday's close, that implies a range of $500 to $549. The upper end of that range sits close to the record high the stock set earlier this month, while the lower end would erase a chunk of its recent run.
What Wall Street Expects
Analysts expect Microsoft to report revenue of $90.64 billion for the quarter, an increase of about 17% from a year ago, according to Visible Alpha consensus estimates. That would mark a step down from the 18.4% growth recorded in the same quarter last year.
Intelligent Cloud revenue — the segment that houses Azure — is forecast to jump 33% to $41.09 billion, while adjusted earnings are projected at $4.73 per share, up from $4.13 a year ago. Analysts have largely held their numbers steady over the past 30 days, a sign that few expect a surprise in either direction.
Microsoft, however, has a habit of topping Wall Street's expectations. In its most recent quarter, the company reported revenue of $90.01 billion, up 17.7% from a year earlier, and beat analysts' earnings estimates. The stock jumped 15% in a single session in July following that report, with better-than-expected cloud revenue doing much of the heavy lifting.
Analyst Views
Morgan Stanley analysts said sentiment on Microsoft has "materially improved" following last quarter's results. They pointed to early FY27 guidance showing durable strength across the company's core growth businesses. The firm believes the valuation remains "reasonable relative to growth" and kept its $600 price target.
Every one of the 13 analysts tracked by Visible Alpha recommends buying the stock — nobody on that list is sitting on the fence. Their mean price target of $614 implies about 17% upside from Friday's close.
Investors will also be watching demand for Azure and the Copilot AI assistant, which have fueled optimism around the company this year. Alphabet and Amazon also report this week, giving investors more data on cloud and AI demand. Microsoft goes first, on Wednesday after the close, with consensus at $90.64 billion in revenue and $4.73 per share.
Source: CoinCentral — Is Microsoft (MSFT) Stock a Buy Ahead of Earnings Wednesday?
