MSFT Records Best Day In Nearly A Year Despite Anthropic, OpenAI Pressure — Can Copilot Momentum Carry Into Q3 Results?

• The stock is on track for its strongest weekly gain in about a year and ranked as the second-best Magnificent Seven performer on Wednesday after Tesla.
• Baird lowered its price target to $500 from $540 but maintained an ‘Outperform’ rating, citing Copilot-related sentiment concerns alongside broader software-sector pressure.
• Xbox Series console demand strengthened, with U.S. video-game hardware spending nearly doubling from the previous year in early April.

Shares of Microsoft Corp. (MSFT) logged their best day in nearly a year on Wednesday as investors bet Copilot traction and Azure trends could help reset sentiment ahead of the company’s third-quarter (Q3) earnings report due later this month.

MSFT stock jumped 5% on Wednesday, hitting its highest level in nearly two months. Shares are also headed for their best weekly gain in about a year and were the second-best performer among the “Magnificent Seven” on Wednesday after Tesla.

Microsoft Q3 Preview: Copilot Progress, Azure Trends In Focus

On Wednesday, Baird lowered its price target on Microsoft to $500 from $540 while maintaining an ‘Outperform’ rating, citing mixed-to-negative sentiment around the company’s software exposure and competitive concerns tied to Copilot, its flagship workplace AI assistant, as AI innovation accelerates across the sector.

Still, the brokerage said continued Copilot traction, strong Azure trends and earnings-per-share growth could help address investor concerns heading into the April 29 report. Baird added that investors are waiting for clearer signs of Azure acceleration before turning more optimistic, though such improvement is unlikely in the upcoming quarter.

According to Koyfin estimates, Microsoft is expected to report revenue of $81.39 billion in Q3, compared with $81.27 billion in the prior quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is projected at $48.2 billion, while adjusted earnings per share (EPS) is expected at $4.07.

Copilot Adoption Push Remains Key To AI Strategy

Earlier this month, Microsoft reportedly pivoted its AI sales strategy to encourage paid adoption of Copilot, after previously focusing on free usage across its Office ecosystem. The firm disclosed in January that about 3% of Office software users were paying for Copilot. Microsoft apparently met “some pretty big audacious goals” for Copilot sales in the quarter ended in March.

Microsoft is also reportedly developing new Copilot capabilities inspired by autonomous agent tech, such as OpenClaw, including always-on assistants that can operate across Microsoft 365 applications on behalf of users.

Xbox Demand Boosts MSFT Shares

Demand for Xbox Series consoles provided another layer of support for Microsoft’s gaming ecosystem after U.S. video-game hardware spending nearly doubled year over year in the week ending April 4, according to Circana’s Retail Tracking Service. 

The increase came ahead of planned price increases and coincided with Sony’s PlayStation 5 hardware hitting its highest weekly sales levels of 2026.

Microsoft Scales Cloud Footprint 

Investors continue to watch the performance of Azure, the company’s cloud platform, closely heading into earnings as Microsoft expands its global cloud footprint to support rising AI workloads. Earlier this week, the company announced plans to acquire 3,200 acres in Cheyenne, Wyoming, to expand its data center footprint.

The expansion builds on Microsoft’s existing presence in the region and follows additional commitments of over $1 billion toward AI infrastructure investment in Thailand and $5.5 billion in Singapore through 2029.

Rising AI Competition Keeps Pressure On MSFT

Despite the recent rebound in the stock, investor concerns about Microsoft’s AI positioning remain elevated after Anthropic disclosed details about its Claude Mythos Preview model last week, which the company said outperformed earlier systems across coding and reasoning benchmarks. Anthropic said the model identified thousands of previously unknown vulnerabilities across major operating systems and web browsers during testing.

Competition has also increased as OpenAI began rolling out its GPT-5.4-Cyber model to selected users to help organizations identify software vulnerabilities.

How Do Retail Traders Feel About MSFT?

On Stocktwits, retail sentiment for MSFT jumped to ‘extremely bullish’ from ‘bullish’ levels a day ago amid a 178% rise in message volumes over the past month.

One user said, “A 7-10% up day is coming before earnings. After earnings, I’m hoping 460-500. Let’s see.”

Another user said, “Hold for long term, this is a very good price, we should fill 480 gap after er! reward is more than the risk!”

MSFT stock has fallen 15% so far this year, making it the worst performer among the “Magnificent Seven” group.

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