Microsoft Corp. (NASDAQ: MSFT) is set to report its fiscal fourth-quarter earnings for 2026 on July 29, with analysts predicting diluted earnings per share (EPS) of $4.21, a 15.3% increase year-over-year. Investors will focus on the company’s capital expenditures (CapEx) for fiscal year 2027, which analysts expect to grow by 20% to 30%, roughly around $220 billion. This guidance will significantly impact investor sentiment regarding Microsoft’s ongoing AI investments.
In the previous quarter, Microsoft’s CapEx hit $31.9 billion, a 49% year-over-year increase, leading to a 22% decline in free cash flow (FCF) to $15.8 billion. For fiscal year 2026, revenue is projected between $324 billion and $327 billion. Azure’s performance, expected to grow by 30% to 40%, will be crucial; any slowdown could indicate excessive spending relative to justifiable growth.
Overall, Microsoft’s stock trades near $380, below its 50-day moving average of around $400, leaving it range-bound ahead of earnings. While a positive EPS is anticipated, the real test lies in the CapEx guidance, which could reaffirm investor confidence or trigger reevaluation of Microsoft’s valuation, currently below its 10-year average.
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