Microsoft Stock Has Barely Budged Since July. Earnings Are About to Change That.

Microsoft stock has been flat since its July 30 earnings, while Apple has risen over 25%. (Adam Gray/Bloomberg)

Microsoft has been all but ignored since its last earnings report. But a “cloudy” outlook when it releases its results this coming week could be just what the stock needs to start heading higher again.

Microsoft briefly topped the $4 trillion market cap milestone in intraday trading after it reported its latest earnings in late July, but the stock has lost momentum since then. Shares, at $520.56, are roughly flat since the company’s fiscal fourth-quarter earnings release on July 30, even as the Nasdaq Composite has gained nearly 9%. Adding insult to apathy, Apple has soared more than 25% and is once again worth about as much as its Redmond, Wash.-based competitor.

Microsoft’s fiscal first-quarter 2026 results are due out on Oct. 29, and Wall Street is forecasting a nearly 11% increase in earnings, respectable growth for a company of its massive size. And that should be powered primarily by strength in Microsoft’s Azure cloud-computing unit. Analysts expect revenue in that division to surge more than 30% from a year ago, according to FactSet.

“The tone from enterprise customers and partners has improved again, with large Azure partners citing accelerating growth trends,” writes UBS analyst Karl Keirstead, whose $650 target for Microsoft is 25% above its current price. He expects Microsoft’s partnership with artificial-intelligence leader OpenAI, the developer of ChatGPT, to improve the outlook for Azure even further in coming years.

Some have expressed concerns about how much money Microsoft is spending on the technology, since a lack of spending discipline could eventually hamper profit margins. CFRA Research analyst Angelo Zino, who has a Strong Buy rating on Microsoft and a $620 price target, isn’t nervous about that, though. In a recent report, he argues that Microsoft’s capital expenditure growth should moderate a bit next year and that future spending plans should see a “greater shift toward servers/hardware, which should also support more profitable AI growth.”

“[Azure] is poised to see strong growth through [2026] and likely beyond,” Zino writes. “The contribution from AI services will continue to make up a greater representation of overall sales” during the next few years, potentially reaching the high teens.

What about the recent softness in Microsoft’s stock since the last earnings report? It’s important to note that it might simply be due for a breather—it is up nearly 25% so far in 2025, unlike Apple and Amazon.com , which have been laggards this year. Despite that, it still trades at a reasonable, if not necessarily cheap, valuation of about 28.5 times earnings forecasts for its next fiscal year, in line with its five-year average.

Jake Seltz, manager of the Allspring LT Large Growth exchange-traded fund—where Microsoft is its second-largest holding—told Barron’s he thinks the stock’s recent underperformance is “unwarranted given its dominance with Azure and the cloud.”

Microsoft could start moving again with another strong earnings report. Jordan Klein, an analyst at Mizuho Securities, calls Microsoft an example of a quality tech stock with “real AI upside and growth” and a “super compelling” long-term buy.

If all goes well, Microsoft may soon find itself back on the AI momentum train.

Write to Paul R. La Monica at paul.lamonica@barrons.com