Microsoft rose 1% in early premarket trading on Wednesday, ahead of its fiscal fourth-quarter earnings report scheduled after market close, as investors focused on capital expenditure guidance and Azure cloud growth amid concerns over heavy AI spending. The company has forecast spending $190 billion in capital expenditures in calendar year 2026, with any changes to this guidance expected to significantly impact the stock. Microsoft has faced mounting pressure from intensifying competition in AI and cloud services from Google, Anthropic, and OpenAI, while its shares fell 23% in the first six months of the year—marking the worst half-year performance since 2000 and the weakest showing among the Magnificent Seven stocks in the first half of 2026.
Microsoft Forecasts $190 Billion CapEx for Calendar 2026
Microsoft has forecast spending $190 billion in capital expenditures in calendar year 2026. The spending trend in the fiscal fourth quarter, which ended in June, as well as any changes to its full-year guidance, would be closely watched. Shares of Amazon, Meta and Microsoft tumbled last week after Alphabet's CapEx forecast hike, even as the search company reported accelerating cloud growth. According to Evercore ISI, Alphabet's move makes it more likely that Amazon and Microsoft will follow suit. Analyst Mark Mahaney said in a recent investor note that Alphabet's capex boost "increases the odds of similar behavior" from Amazon and Microsoft.
The growth in Microsoft's cloud unit, Azure, would also be key, with Google setting a high bar. Google Cloud sales increased a record 82% last quarter. Revenue from Microsoft's Azure and other cloud services grew 40% in the company's fiscal third quarter. Investors will also closely track subscription growth for Microsoft's flagship AI product, Microsoft 365 Copilot, which has seen tepid adoption.
MSFT Stock Falls 23% in First Six Months
MSFT shares fell 23% in the first six months of the year, marking their worst half-year performance since 2000 and the weakest showing among the Magnificent Seven stocks in the first half of 2026. MSFT is down 18.3% year-to-date. Although shares have risen in July, Microsoft has come under pressure amid a broader selloff in software stocks, hefty capital spending plans and intensifying competition in AI from Google, Anthropic, and OpenAI.
Earlier this month, Microsoft carried out a major restructuring at its Xbox division, cutting some 3,200 jobs. The company also said at the time that it would sell or spin off five game development studios. In June, Microsoft eliminated 6,000 roles, or about 4% of its workforce, primarily across product and engineering teams.
Analysts Expect Microsoft Q4 Revenue at $87.63 Billion
Analysts expect Microsoft's fiscal fourth quarter revenue to rise 15% to $87.63 billion—which would be the lowest in the last five quarters—and adjusted profit to also increase by the same degree to $4.22 per share, per Koyfin data. Currently, 50 out of 53 analysts rate MSFT stock 'Buy' or higher and the remaining three rate it 'Hold,' per Koyfin data. Their average price target of $555.77 implies a 41% upside from the stock's closing price on Tuesday.
Retail Sentiment for MSFT Holds at Neutral
On Stocktwits, the retail sentiment for MSFT was 'neutral,' unchanged for the past two weeks. One trader wrote, "$MSFT this has taken a nosedive too many times after earnings. I think PT's will be on track after tomorrow. 550 years end," forecasting the stock to run 40% higher. The Federal Reserve's interest rate decision on Wednesday afternoon will also likely influence Microsoft stock and the broader market. Microsoft's earnings report will coincide with that from Meta Platforms.
FAQ
What did Microsoft forecast for capital expenditures in calendar year 2026?
Microsoft has forecast spending $190 billion in capital expenditures in calendar year 2026. Any changes to this full-year guidance would be closely watched by investors.
How did MSFT stock perform in the first six months of the year?
MSFT shares fell 23% in the first six months of the year, marking their worst half-year performance since 2000 and the weakest showing among the Magnificent Seven stocks in the first half of 2026. MSFT is down 18.3% year-to-date.
What are analysts' expectations for Microsoft's fiscal Q4 results?
Analysts expect Microsoft's fiscal fourth quarter revenue to rise 15% to $87.63 billion and adjusted profit to increase by the same degree to $4.22 per share, per Koyfin data. Currently, 50 out of 53 analysts rate MSFT stock 'Buy' or higher.
