Microsoft Stock Slips Ahead Of Q2 Earnings, But Retail Stays Hopeful With Azure, Capex In Focus

Microsoft Corp. (MSFT), one of the frontrunners in the artificial intelligence (AI) race, is scheduled to release its fiscal 2025 second-quarter earnings report after the market closes on Wednesday. Retail sentiment has soared ahead of the report. 

Analysts, on average, expect Redmond, Washington-based Microsoft to report earnings per share (EPS) of $3.11, higher than the year-ago quarter’s $2.93 but less than the $3.30 earned in the previous quarter.

Second-quarter revenue is expected to improve to $68.87 billion from $62.02 billion a year earlier. The top line will likely be better than the first quarter’s $65.58 billion.

Revenue and EPS have topped expectations in each of the past four quarters. 

Although Microsoft stock was dented by fears linked to China’s DeepSeek posing a threat to OpenAI’s dominance, sell-side analysts have since reassured investors. 

According to Morgan Stanley’s Keith Weiss, building out enterprise applications using foundational models is a far greater opportunity. He also pointed out that Microsoft is not merely a reseller of large-language models (LLM).

Ahead of the results, Wedbush analyst Daniel Inves said he expects Microsoft CEO Satya Nadella and team to double down on the AI vision/build-out.

The analyst said, “With AI revenues on track to surpass an annual revenue run rate of $10 billion this quarter, this speaks to the eye-popping growth MSFT is seeing from this once-in-a-40-year tech transformation.”

Investors may also monitor the growth of Azure public cloud computing business and the capex guidance the company issues on the earnings call. 

CFO Amy Hood said on the firsr-quarter earnings call in late October that capex will increase sequentially due to the AI demand and cloud signals. She guided second-quarter Azure revenue growth to 31%-32% in constant currency. 

On Stocktwits, retail sentiment toward Microsoft stock stayed ‘extremely bullish’ (85/100) and message volume was at ‘extremely high’ levels.

Some retail investors are eyeing a $50 upside if Microsoft manages to beat expectations and issue good guidance.

The two key focal points of a few retailers are Azure revenue and the forward guidance.

Microsoft stock came under pressure ahead of the quarterly earnings announcement, slipping nearly 0.80% to $443.81. After a 13% rise in 2024, the stock has added slightly over 15% so far in January.

The average analyst price target for the stock is $512.77, according to TipRanks, suggesting scope for about 16% upside potential.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: Meta Q4 Earnings Preview: Retail Bullish Despite DeekSeek Threat, Lingering Macro Economic Uncertainty