Microsoft rose about 1% on Thursday even as the broader technology sector fell, and Wall Street analysts lifted their outlooks ahead of the company's July 29 earnings. BNP Paribas expects accelerating Azure growth but flags rising AI spending as a drag on margins.
Microsoft shares rose about 1% on Thursday, outperforming a weak technology sector as investors rotated into large-cap defensive names. Over the same session, the Nasdaq Composite fell 1.35%, the S&P 500 slipped 0.37%, and the technology sector declined 2.4%.
Analysts hold bullish view into July 29 report
Several Wall Street analysts updated their outlooks on Microsoft while keeping bullish ratings ahead of the company's quarterly results on July 29. Wall Street expects earnings of $4.23 per share, up from $3.65 a year earlier. Revenue is projected to rise to $87.61 billion from $76.44 billion.
BNP Paribas expects another quarter of accelerating cloud growth, forecasting Azure revenue growth of about 41%, ahead of the roughly 40% consensus estimate. The firm also expects stronger Microsoft 365 Copilot adoption in the seasonally stronger fourth quarter, with potential for 7 million to 8 million new paid seats.
AI spending is the swing factor
BNP Paribas expects investors to focus on three topics during the call: Copilot adoption, initial fiscal 2027 operating margin guidance, and the capital spending outlook. The firm forecasts fiscal 2027 revenue growth of nearly 18%, above the Street's expectation of about 16.8%, driven by continued Azure momentum and expanding AI workloads.
That growth carries a cost. BNP Paribas expects operating margins to contract modestly as depreciation expenses rise alongside Microsoft's AI infrastructure investments. The firm raised its calendar 2026 cash capital expenditure estimate to $195 billion, citing continued component inflation, and expects even higher spending in fiscal 2027.
Despite trimming its valuation, BNP Paribas said Microsoft's leadership across cloud computing, enterprise software and generative AI still supports a constructive long-term outlook. At publication Thursday, Microsoft shares were up 1.13% at $400.10, according to Benzinga Pro data.
Source: Benzinga
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