Microsoft Faces Market Test on July 29 Over AI Capex Outlook

Overview

• Microsoft will report fiscal fourth‑quarter 2026 results on July 29 with Wall Street expecting roughly $4.21–$4.24 in EPS and about $87.6 billion in revenue.
• Analysts and investors are focused on capital spending after third‑quarter capex rose to about $31.9 billion and free cash flow fell to roughly $15.8 billion, raising concern about funding for AI data centers.
• A wide range of capex forecasts is boosting market sensitivity, from typical analyst models that expect 20–30% growth to BNP Paribas’s projection that fiscal‑2027 capex could reach $262 billion.
• Microsoft’s cloud business provides the case for the spending, with Azure/cloud growth running in the 30–40% range and paid commercial Copilot seats reported above 20 million.
• Shares are down about 21% year‑to‑date with a forward P/E near a decade low even as most analysts remain bullish—46 of 51 rate Microsoft a Buy—so capex guidance and Azure direction could prompt rapid re‑pricing if they disappoint.