Key takeaways
- Microsoft shares are expected to move about 4% by the end of the week, according to recent options pricing data, as the company prepares to release its quarterly results on Wednesday after the closing bell.
- The stock jumped to an all-time high following strong results in July, but has since trended sideways.
- Wall Street analysts are overwhelmingly bullish on Microsoft stock, which hopes to get a boost from another quarter of strong cloud computing growth.
Microsoft (MSFT) is scheduled to report its quarterly results after markets close on Wednesday, and some investors expect the stock to hit a new record high.
Options prices suggest that traders expect Microsoft shares to move about 4.4% in either direction by the end of the week. A move of that magnitude from Friday’s close would put the stock around $546, an all-time closing high, or around $500, its lowest price since early September.
Why this is important
Microsoft, with a market capitalization of nearly $4 trillion, has more influence on the broader market than almost any other stock. Strong results and a consistent stock market movement could boost the major indices and improve sentiment on Wall Street.
Microsoft shares have moved an average of nearly 6% following its four most recent earnings reports. In July, shares rose about 4% the day after the company reported better-than-expected earnings driven by cloud computing growth. Shares rose more than 7% thanks to similarly strong results in April.
Microsoft shares have risen about 26% since the beginning of the year, but the stock has remained stagnant since jumping to a record high following its July earnings report. Economic uncertainty weighed on stocks through the first months of the year before a series of trade deals and optimism about artificial intelligence helped lift stocks into the summer.
Analysts expect Microsoft to report another quarter of strong revenue and profit growth. Microsoft’s Azure cloud computing platform, where the company recognizes revenue from hosting AI workloads, is expected to grow 38% year over year.
Investments in artificial intelligence will also be in the spotlight. Executives estimated capital spending would total $30 billion in the quarter reported Wednesday. Bank of America analysts wrote in a note last week that an increase in Microsoft’s capital spending guidance could give the stock a post-earnings boost.
Analysts are overwhelmingly bullish on Microsoft stock, with all 16 analysts tracked by Visible Alpha with current price targets rating the stock a “Buy.” Their average price target of around $640 represents about a 20% upside from the stock’s intraday price on Monday.
