Zacks Investment Ideas feature highlights: Microsoft

For Immediate Release

Chicago, IL – October 29, 2025 – Today, Zacks Investment Ideas feature highlights Microsoft MSFT.

Microsoft Heading Mag-7 Earnings Blitz, Eyes "Cup with a Handle" Breakout

It’s been a remarkable start to the third-quarter earnings season.

Through this past Friday, we’ve now received Q3 results from 145 S&P 500 members, or 29% of the index’s total membership. Total earnings for these companies are up 14.9% from the year-ago period on 7.8% higher revenues.

The bullish figures are even more impressive given the fact that nearly 87% of the companies that have reported results beat EPS expectations. With estimates remaining steady (and even increasing across certain sectors) heading into the season, the pace thus far supports the notion that earnings growth will continue to drive this bull market.

The earnings season will really heat up this week with more than 800 companies due to report, including nearly a third of S&P 500 constituents. Microsoft joins four other Magnificent Seven members in reporting quarterly results.

Microsoft Nears $4 Trillion Market Cap Ahead of Earnings

One of the largest broad-based technology providers in the world, Microsoft is set to report its fiscal first-quarter earnings on Wednesday after the closing bell.

Wall Street remains bullish on the company’s bottom line. Analysts are expecting Microsoft to deliver quarterly earnings of $3.65 per share, up 10.6% from the $3.30/share recorded a year ago. Estimates have remained stable over the past 60 days.

Microsoft looks to extend its impressive string of earnings beats, eyeing its 13^th consecutive positive surprise heading into Wednesday’s release. The Washington-based tech giant delivered a 7% average earnings surprise over the last four quarters. The Zacks Consensus Estimate for revenues is pegged at $74.96 billion, which would mark a 14.3% improvement versus the same quarter in the prior year.

Microsoft's strategy hinges on positioning itself at the epicenter of the AI value chain. The company is expected to have capitalized on AI business momentum and Copilot adoption during the latest quarter alongside accelerating Azure cloud infrastructure expansion.

Growth is set to remain powered primarily from the latter, with analysts projecting revenues from the cloud-computing unit to increase about 38% to $23 billion. The Azure platform has rapidly become the infrastructure of choice for AI workloads.

We’ve seen an optimistic tone from Microsoft’s enterprise customers and partners in recent weeks. The company demonstrated exceptional enterprise penetration in fiscal 2025 amid healthy renewals and a significant expansion in large contracts, including $100M+ deals for both Azure and Microsoft 365 platforms. A robust trend of commercial bookings bodes well for continued growth during the latest quarter.

Analysts will be closely watching Microsoft’s capital expenditure plans for evidence that its infrastructure spending is on track. A strong balance sheet provides unrivaled competitive advantages for AI infrastructure investment, with the company planning over $30 billion in capital expenditures for fiscal Q1 alone. That figure represents a remarkable trajectory of more than 50% year-over-year growth.

Final Thoughts

With a market capitalization nearing $4 trillion, Microsoft holds the second-largest weighting in the S&P 500, trailing only Nvidia (though Apple remains right on its heels).

Microsoft shares have mainly moved sideways since July following its last earnings release. Still, the Zacks Rank #2 (Buy) is outperforming this year with a 27% return year-to-date.

Another double-beat report on Wednesday along with higher-than-anticipated AI infrastructure spending could be exactly what Microsoft stock needs to kickstart the next leg higher. Shares look to be setting up a powerful cup-with-handle breakout pattern ahead of Wednesday’s announcement.

Be sure to keep an eye on Microsoft – as well as the other 4 members of the Mag 7 reporting this week – as their results will likely set the tone for the remainder of the fourth quarter.

Disclosure: MSFT is a current holding in the Zacks Income Investor portfolio.

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