Redmond, Washington-based Microsoft Corporation (MSFT) is one the largest software companies in the world. It dominates the PC software market with more than 80% of the market share for operating systems and also provides various market leading business and productivity software. With a market cap of $3.1 trillion, Microsoft employs 228,000 people and operates in 190+ countries across the globe.
The software giant is expected to announce its second-quarter earnings on Tuesday, Feb. 4. Ahead of the event, analysts expect Microsoft to report a profit of $3.13 per share, up 6.8% from $2.93 per share reported in the year-ago quarter. Furthermore, the company has surpassed Wall Street’s bottom-line estimates in each of the past four quarters. Its EPS for the last reported quarter increased 10.4% year-over-year to $3.30, exceeding analysts’ estimates by 7.1%.
For fiscal 2025, analysts expect Microsoft to deliver an EPS of $12.92, up 9.5% from $11.80 in fiscal 2024. While in fiscal 2026, its earnings are expected to surge 14.2% year-over-year to $14.76 per share.
MSFT stock has gained 13.3% over the past 52 weeks, substantially lagging behind the S&P 500 Index’s ($SPX) 24.2% surge and the Technology Select Sector SPDR Fund’s (XLK) 23.9% returns during the same time frame.
Despite crushing analysts’ earnings and topline projections, Microsoft’s stock prices plummeted 6.1% in the trading session after the release of its Q1 results on Oct. 30. The company reported an impressive 16% year-over-year growth in total revenues to $65.6 billion and a robust 10.7% increase in net income to $24.7 billion. Additionally, Microsoft achieved a record EPS of $3.30.
However, Microsoft’s guidance for the next quarter fell short of Wall Street’s expectations. The company forecasts Azure’s Q2 constant currency revenues to grow by 31% to 32%, down from 34% in Q1, and its Intelligent Cloud segment to grow between 18% and 20%, down from 21%. Furthermore, due to anticipated losses from OpenAI, Microsoft expects its other income and expenses to amount to a negative $1.5 billion. These updates unsettled investor confidence, leading to a massive sell-off.
Nonetheless, analysts remain strongly bullish on the stock’s long-term prospects. MSFT has a consensus “Strong Buy” rating overall. Among the 41 analysts covering the stock, 34 recommend “Strong Buy,” four suggest “Moderate Buy,” and three advise a “Hold” rating. Its mean price target of $508.31 indicates a 19.7% upside potential from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. More news from Barchart