Microsoft Corp. (NASDAQ: MSFT) headlines what one analyst is calling "the biggest earnings day ever," with four members of the Magnificent 7 reporting after Wednesday's closing bell. Heading into the print, Microsoft is one of the laggards of the group. Shares have fallen roughly 22% from their 52-week high of $555.45, leaving the software giant with ground to make up against its mega-cap peers.
What Wall Street Expects
For its fiscal third quarter, Microsoft is expected to report:
- Earnings per share: $4.06
- Revenue: $81.36 billion
The Big Picture: Four Mag 7 Names In One Night
"It's the biggest earnings day ever. Four of the Mag 7 stocks are reporting on Wednesday. And Microsoft is near the bottom of the group. It's down 22% from its 52-week high," Stephen Callahan, trading behavior specialist at Firstrade, told Benzinga.
With Microsoft, Meta Platforms (NASDAQ: META), Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG) and Amazon.com Inc. (NASDAQ: AMZN) all reporting on the same evening, "we will learn a lot in a short period of time," Callahan said.
What Microsoft Investors Should Watch
The number one item on the checklist: capacity.
"Microsoft investors need to watch for signs that the company can keep up with AI demand. Last quarter, the company said its growth was hampered by capacity constraints," Callahan said.
That theme has been building for several quarters.
CFO Amy Hood warned on the previous earnings call that Microsoft would be "a little tight" on AI capacity heading into the back half of fiscal 2025, and Azure has restricted new subscriptions in parts of Virginia and Texas through 2026 as demand outpaces buildout.
AI Compute: The Engine - And The Bottleneck
Callahan framed why this matters for the broader market.
"AI Compute refers to the quantity of hardware and software infrastructure needed to train and run AI models. It's the engine driving AI progress ... The demand has increased to the point where these companies don't have enough capacity to fill the demand," he said.
That dynamic is why Wednesday's prints will double as a read on consumer and enterprise demand - and why tech remains a magnet for capital.
The Firstrade strategist pointed to two central questions hanging over the group: how the earnings results will indicate the overall health of consumer demand, and why tech firms are likely to remain attractive to investors despite the recent pullback.
Capex: Can They Spend It All?
The other big tell: capital expenditures. Microsoft has guided to roughly $80 billion in AI data center spending this fiscal year, and the Street wants to know if that money is actually getting deployed.
"All four of these builders of data centers are going to tell us whether they will be able to spend all the capex they've allocated," Callahan said.
MSFT Price Action
Microsoft shares closed at $429.25 on Tuesday, well off the 52-week high of $555.45 set last year.
Despite the pullback, 37 analysts tracked by Benzinga have a median price target of $571.64, implying meaningful upside if the company can convince investors that the AI capacity wall is a near-term issue rather than a structural one.
Microsoft has beaten EPS expectations in each of the past four quarters and Wednesday's results will show whether that streak - and the AI trade carrying it - has another leg.
MSFT Price Action: Microsoft shares were down 0.54% at $426.94 during Wednesday's premarket trading, according to Benzinga Pro data.