Microsoft Q4 earnings preview: Eyes on AI productivity and cloud strength

Microsoft (MSFT) is set to report its fiscal fourth-quarter (Q4 FY2025) results after the market closes on Tuesday, 30 July. With the stock up over 20% since the start of the year and trading just off record highs, the market is looking for confirmation that the tech giant’s AI investments are translating into stronger productivity, improved margins, and sustainable growth.

Solid top-line growth expected, but margin discipline is key

Wall Street expects Microsoft to post adjusted revenue of approximately $73.89 billion, up around 14% year-over-year, with earnings per share (EPS) forecast at $3.37, representing annual growth of approximately the same. Adjusted net income is estimated at $25.26 billion.

While the numbers reflect healthy expansion, analysts are focused on how Microsoft is managing the balance between revenue growth and rising operating costs — particularly around AI infrastructure. Consensus sees EBITDA at $39.65 billion, with a slight uptick in operating profit margins.

Management commentary on operating discipline will be key, especially after recent estimates suggested that AI-related spending could compress margins going forward.

Investors remain focussed on Azure growth and AI monetisation

The spotlight remains firmly on Azure, Microsoft’s cloud platform, which has been a critical driver of growth. Analysts are watching closely for signs of acceleration in Azure revenue, which is expected to contribute strongly to the quarter’s top-line result.

Microsoft’s AI sales may have reached $4–4.5 billion this quarter, with AI now contributing roughly 15–16 percentage points to Azure’s growth. Productivity and business processes could deliver $32.2 billion in sales, while Intelligent Cloud is projected to generate $28.9 billion, led by strong Azure demand.

However, the near-term question is whether these AI gains are boosting actual productivity and operating leverage — or simply fuelling costs. Management’s tone on future monetisation, cloud deal flow, and capital spending will be critical for sentiment.

Analyst sentiment is strongly bullish amidst lofty expectations

Analyst sentiment ahead of the report remains overwhelmingly bullish. According to Bloomberg data, 90.3% of analysts rate Microsoft a buy, with just one sell rating. The average 12-month price target sits at $554.08, implying a modest upside from current levels.

Microsoft has delivered a clean sweep of earnings beats in its last eight quarters, but with the stock now trading at 35.3x forward earnings, investor tolerance for even small disappointments is low. Continued outperformance in both Azure and AI is likely needed to sustain valuation multiples.

Microsoft stock in bullish trend but almost priced for perfection

Options markets imply a 4% move on results day, roughly in line with recent earnings volatility. With Microsoft’s share price up over 20% in the last seven months, and the stock trading near $513, sentiment is high. That said, strong commentary around AI productivity, easing capital intensity, or accelerating cloud growth could propel the stock to fresh all-time highs.

From a technical standpoint, the market is undoubtedly bullish on Microsoft shares. The stock is in a stable uptrend and near record highs. Arguably, upward momentum is slowing on the daily charts, with a modest bearish divergence evident on the RSI. A break to new highs would be a bullish signal, while a break of upward sloping trendline support would signal a potential pullback.


(Source: Trading View)
(Past performance is not a reliable indicator of future results)