Microsoft (MSFT) Earnings Preview: What to Expect From Wednesday’s Fiscal Q1 Report
Azure’s guided 45% growth rate and a roughly $50 billion capex quarter will likely matter more to the stock than the headline EPS beat.
Microsoft reports fiscal first-quarter 2027 results after the market close on Wednesday, October 28, the same day as Alphabet and the Federal Reserve’s rate decision. It’s one of the headline reports in a week stacked with more than two dozen S&P 100 companies — see the full calendar on our Corporate Earnings This Week tracker.
What to Watch
Microsoft guided fiscal Q1 revenue to a range of $89.85 billion to $90.95 billion, up roughly 16% at the midpoint, with Street consensus landing at $4.71 in EPS versus $4.13 a year earlier. The number investors will watch most closely is Azure: management guided constant-currency growth of about 45%, an acceleration from fiscal Q4’s 43%, and the CFO said on the last call that growth should keep accelerating through the first half of fiscal 2027. That acceleration is coming at a cost — fiscal Q4 capital expenditures, including finance leases, hit $41 billion (up 69% year over year), free cash flow fell to $19.6 billion, and fiscal Q1 capex is guided to roughly $50 billion. Full calendar-2026 capex now sits near $175 billion, down from the roughly $190 billion guided back in April, partly reflecting a reclassification of some AI infrastructure leases from finance to operating leases rather than a pullback in actual spending.
Analyst Estimates and Price Targets
Wall Street’s average price target sits in the $592-$599 range, well above Microsoft’s recent close near $521. Melius Research has one of the Street’s highest targets at $665, turning more bullish on Microsoft’s position in AI security, while Rothschild & Co Redburn carries one of the lowest targets on the Street at $440 after downgrading the stock to Neutral on concerns about the pace of AI spending relative to returns — a view echoed by Phillip Securities’ downgrade to Hold on October 12. The spread between those calls captures the central debate heading into Wednesday’s report: whether Azure’s accelerating growth justifies capex that’s climbing faster than free cash flow.
Why It Matters
Microsoft’s report lands the same afternoon as Alphabet’s own Q3 results and just hours before the Federal Reserve’s Wednesday rate decision, making October 28 the single busiest day of this earnings season. Microsoft’s AI infrastructure spending is also directly relevant to this week’s Verizon-AWS infrastructure deal, part of a broader trend of carriers and cloud providers racing to build out AI-ready networks. A confident Azure guide could help validate the AI capex cycle broadly; a disappointing one could add to the kind of AI-financing anxiety that has periodically rattled markets this fall.
For the full recap once results are out, and for coverage of other companies reporting this week, see our Earnings coverage, the MSFT Stock Fact Sheet, and the Stock Fact Sheets hub.
This article is for informational purposes only and does not constitute investment advice. Analyst estimates and price targets are subject to change; consult a financial advisor before making investment decisions.
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