Microsoft’s Earnings Preview: AI and Cloud Growth in the Spotlight

As Microsoft prepares to release its quarterly financial results, investor focus is intensifying on two critical areas: the tangible returns from its artificial intelligence investments and the sustained momentum of its cloud computing division. This scrutiny comes on the heels of a notable share price recovery, with the stock closing at $465.95 on Friday, January 24, 2026, marking a single-day gain of 3.28%—its most significant advance since May 2025.

The company is scheduled to announce its figures for the second fiscal quarter after the U.S. market closes on Wednesday, January 28, 2026. Wall Street analysts have established clear benchmarks for performance. Consensus estimates project revenue of approximately $80.28 billion, with adjusted earnings per share expected around $3.86.

All eyes will be on the Intelligent Cloud segment, which houses the Azure platform. Analysts are anticipating year-over-year growth of 26.9% for this division. However, expanded capital expenditure on data centers and AI infrastructure has recently pressured profitability margins. The upcoming report will be closely examined for evidence that this substantial investment is beginning to yield financial returns.

Concrete Deals Fuel AI Optimism

The recent rebound in Microsoft's equity value appears to be supported by tangible business developments, moving beyond speculative hype. On January 20, the technology giant unveiled a collaboration with Bristol Myers Squibb focused on using AI for the early detection of lung cancer. This was swiftly followed, just two days later, by the announcement of a multi-year partnership with the Mercedes-AMG PETRONAS Formula 1 team. This deal aims to leverage Microsoft's cloud and AI technologies to optimize performance and analytics within the motorsport arena.

Should investors sell immediately? Or is it worth buying Microsoft?

These agreements are being interpreted by the market as early indicators that Microsoft's massive capital outlays in artificial intelligence are transitioning from theoretical investment to practical, revenue-generating applications.

Analyst Sentiment Holds Firm Despite Pullback

Even though Microsoft shares have declined roughly 15% over the preceding three months, the majority of market researchers maintain a constructive long-term view. While some have adjusted their price targets in light of a broader sector reevaluation, their investment theses remain positive.

UBS, for instance, revised its target down from $650 to $600, citing an industry-wide reassessment of software valuations. Despite this adjustment, the firm retained its "Buy" recommendation. Similarly, Citigroup lowered its target from $690 to $660, while continuing to advise clients to purchase the stock.

The current average analyst price target sits in a range between $618 and $625, suggesting significant potential upside from present trading levels. The forthcoming earnings release on January 28 will provide crucial data points to assess whether Microsoft can meet its high expectations and validate the market's confidence in its strategic AI direction.