MSFT Stock Faces A Bigger Test Than Earnings, Gene Munster Says — Why The ‘Bot Boogeyman’ Won’t Go Away

• Gene Munster urged investors to look beyond Microsoft’s earnings, saying the company’s long-term AI and business model challenges matter more than its quarterly results.
• Munster said the “battle with the bots” is just beginning, adding that AI agents could reduce the importance of traditional software interfaces despite Microsoft's entrenched products.
• Stocktwits retail traders remained bullish ahead of earnings, with some expecting Microsoft shares to climb to $420 or even revisit previous highs.

Microsoft Corp. (MSFT) is set to report its quarterly earnings after the closing bell on Wednesday. But a day before the earnings, Deepwater Asset Management’s Gene Munster said investors should look beyond the results, adding that the software giant faces longer-term challenges from artificial intelligence and changes to its business model.

MSFT shares ended the regular session up about 1% and had added another 0.25% in after-hours trading at the time of writing.

MSFT Needs A New Business Model, Munster Says

Ahead of the earnings report, Munster said in a post on X that Microsoft’s earnings “don’t matter” because its “battle with the bots is just beginning.”

He said the company faces two major headwinds over the next five years that could make the stock a “value trap,” even if the shares rise following the results.

Munster said, “They need to restructure their business model from per-seat to usage-based.” While he expects Azure to “crush it” over the next few years, he adds that the company’s “core business needs a new pricing model.”

He said Microsoft hinted at the shift last quarter and investors are likely to hear more with the upcoming earnings report. However, Munster warned that “new business model = uncertainty = low multiple,” suggesting the transition could weigh on the company’s valuation.

Munster Says ‘Battle With The Bots’ Is Just Beginning

Munster said Microsoft’s “battle with the bots” is just beginning, adding that even if the company reports impressive earnings, the “bot boogeyman will not go away.”

He added, “The reason is the utility of software is based on the abstraction layer (the ability of humans to interface with the machine). Agents and bots remove the need for the abstraction layer because they just need bot-talk.”

While acknowledging how entrenched Microsoft’s products are, citing his daily use of Excel as an example, Munster said “entrenchment” is a relative term when AI has the potential to rebuild business processes from the ground up.

MSFT Stock: Retail Traders Stay Bullish Ahead Of Earnings

On Stocktwits, retail sentiment for MSFT improved to ‘neutral’ from ‘bearish’ over the past 24 hours, while message volume climbed to ‘high’ at the time of writing.

Retail traders remained upbeat ahead of the company's earnings report, with one trader saying Microsoft could break above $405 after the results, and adding that the earnings release “will be a blast.”

Another trader predicted the stock could reach $420 in after-hours trading on Wednesday and $440 by Friday.

A third trader said they expect August to be a “recovery month” for Microsoft, adding that the company could revisit its previous highs, supported by what they described as “solid” fundamentals, a $620-billion backlog and continued innovation.

MSFT stock has lost nearly 19% year-to-date.

Also See: F Stock Jumps 8% After-Hours On Q2 Earnings Beat — Ford Also Raises 2026 Profit Outlook

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