Can Microsoft's Q4 Earnings Push Its Valuation Past $4 Trillion? Here Are 3 Things Investors Are Watching

Microsoft (MSFT) is due to release its quarterly results after the market closes on Wednesday, and investors are expecting great milestones if the print reveals upbeat numbers.

The Satya Nadella-led company is widely expected to report earnings per share (EPS) of $3.38 and revenue of $73.83 billion for the fourth quarter of fiscal year 2025, according to a consensus compiled by Fiscal.ai. The consensus revenue estimate implies year-over-year (YoY) growth of 14.06%.

While releasing its third-quarter results in April, the company flagged Azure cloud revenue growth of 34% to 35% in constant currency. The company also stated that its capital spending will increase sequentially from the $21.4 billion spent in the third quarter. 

The full-year capital expenditure (capex) guidance was reaffirmed at $80 billion. 

Microsoft, a frontrunner in the artificial intelligence (AI) race, has turned to job cuts to reduce costs, thereby freeing up resources for AI investments. 

In a communication to employees at the start of the next fiscal year,  CEO Satya Nadella said the recent eliminations were the “most difficult,” but pointed out that the company was investing more in capital expenditure, maintaining its headcount steady despite the eliminations, and also recognizing and rewarding talents and expertise at levels never seen before.

On Stocktwits, retail sentiment toward Microsoft stock stayed ‘extremely bullish’ (80/100) by late Tuesday, and the message volume remained at ‘high’ levels.

A bullish user predicted that the stock would rally to $535 by Thursday morning, taking into account likely price increases for CoPilot, Sentinel, Logs, Windows 365 Cloud PC, Azure, and a subscription price hike. “Rocket is ready to take off,” they said.

Another user said they were long on Microsoft ahead of the results.

Previewing the quarterly results, Morgan Stanley analyst Keith Weiss said he is confident of mid-30s constant currency Azure growth. He also expects mid-teens growth in M365 Commercial Cloud. 

Weiss sees the potential for low operating expenditure growth, likely offsetting gross margin pressure from mix shift toward Azure, Azure AI, and Copilots.

Microsoft stock has risen by over 22% this year, and the company is approaching the market capitalization milestone of $4 trillion, a milestone that only AI chip giant Nvidia has reached so far. The 12-month average analysts’ price target compiled by Koyfin ($549.90) suggests there’s still over 7% upside potential.

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