Microsoft (NYSE:MSFT) will release its latest earnings on Wednesday and analysts will be looking for cracks in AI and cloud growth.
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The MSFT price now trades at $391.16 after finding some strong support at $350 recently. This aligns well with a double bottom formation from 2024 and could see further gains.
Microsoft releases earnings on Wednesday, and although the business may not be too exposed to the risk of tariffs, analysts are still concerned about economic uncertainty. Many businesses that drive revenue at the tech giant are becoming more cautious in their spending on cloud computing and AI services, analysts said.
The trend is expected to hurt key Microsoft products such as the Azure cloud platform, Microsoft 365 enterprise subscriptions, and Microsoft 365 Copilot. Overall, analysts expect to see revenue of $68.44 billion, up 11% from a year earlier, and earnings of $3.22 per share.
Morgan Stanley recently cut its forecast for Azure growth to 31% for the March quarter, down from an earlier prediction of 31.5%. The firm added that businesses are being more cautious about new Azure subscriptions, and warned of slower growth ahead.
Cantor Fitzgerald analysts said interest in the Copilot AI assistant remains strong, but many customers are looking for further reasons to boost adoption, with discounts as high as 40%.
“Interest remains very high, but increasingly customers are using financial operations teams and searching for business cases to justify the product,” analysts wrote.
Wedbush analysts lowered their price target to $475 from $550, but said they “remain long term bullish” on Microsoft, due to its AI upside. “It has become crystal clear to us that the monetization opportunities around deploying AI in the cloud is a transformational opportunity,” they said.
The stock price is in good shape for a return to the bullish stance if the earnings are positive and the market remains stable.
