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Key Summary
Microsoft (MSFT) is scheduled to release its fiscal year 2026 fourth-quarter earnings after the market closes on July 29, 2026 (local time).
The market expects this quarter's revenue to range between approximately $86.7 billion and $87.8 billion, with the earnings per share (EPS) consensus hovering around $4.24.
The most hotly debated topic is the expansion speed of artificial intelligence (AI) services and the sustainability of the rapidly rising infrastructure capital expenditures (CapEx) needed to support it.
Amid a three-way decoupling characterized by overvaluation concerns in US tech stocks, delayed economic recovery in Europe, and diverging monetary policies in Asian markets, this earnings report is highly likely to serve as a bellwether for global stock markets.
Current Market Overview
As of today, July 26, 2026, global stock markets show the KOSPI at 6690.62, KOSDAQ at 748.22, Nasdaq at 24975.82, and the USD/KRW exchange rate at 1463.10 KRW.
Recently, global stock markets have shown a distinct decoupling trend based on regional economic fundamentals and monetary policies.
In the United States, backed by strong service-sector growth, the July S&P Global Flash Composite PMI recorded 53.6, while the Manufacturing PMI showed a modest expansion at 53.8.
In the Eurozone, despite energy supply chain risks and geopolitical uncertainties, the July Composite PMI rebounded to 51.9, somewhat easing fears of a severe recession.
Meanwhile, in Asian markets, monetary policy moves are diverging. The People's Bank of China (PBOC) froze the 1-year LPR at 3.0%, and the Bank of Japan (BOJ) is widely expected to hold its July interest rate around 1.0%.
Under this macroeconomic environment, the Nasdaq Fear & Greed Index is currently in the "Fear" (39.4) territory, indicating somewhat dampened investor sentiment.
At the same time, the KOSPI Fear & Greed Index is in the "Extreme Fear" (12.9) stage, reflecting a strong preference for safe-haven assets in the market.
Furthermore, oil prices such as Brent crude are fluctuating due to geopolitical conflicts in the Middle East, and copper prices—a critical raw material for data center construction—remain high at around $13,600 per ton on the London Metal Exchange (LME), adding to infrastructure construction cost burdens.
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Financial Analysis
Microsoft's mid-to-long-term growth engine clearly stems from its Intelligent Cloud segment and Azure's growth.
In the previous quarter (FY2026 Q3), the company beat market expectations by recording revenue of $82.9 billion (an 18% year-over-year increase) and an EPS of $4.27.
A comparison of the expected earnings for this quarter with the previous quarter's figures is summarized below:
| Category | FY 2026 Q3 (Actual) | FY 2026 Q4 (Outlook) | YoY Change & Characteristics |
|---|---|---|---|
| **Total Revenue** | $82.9 Billion | $86.7 Billion ~ $87.8 Billion | Continued growth driven by cloud and AI demand |
| **Earnings Per Share (EPS)** | $4.27 | Approx. $4.24 (Consensus) | Focus on margin pressure from rising CapEx |
| **Azure Growth (CC)** | 40% | 39% ~ 40% (Guidance) | Robust demand sustained despite supply constraints |
| **Capital Expenditures (CapEx)** | $30.88 Billion | Expected to exceed $40 Billion | Focused on preemptively securing GPU and power infra |
| **Remaining Performance Obligations (RPO)** | $627.0 Billion | Undisclosed (To be announced) | Expected to recognize approx. 25% as revenue over next 12 months |
Microsoft's Q3 CapEx surged 84.39% year-over-year to $30.88 billion, and this figure is estimated to surpass $40 billion in Q4.
Although astronomical expenditures continue, the $627.0 billion in commercial Remaining Performance Obligations (RPO) serves as a solid backlog, supporting stable revenue conversion in the future.
Additionally, the company boasts a highly robust financial structure with a debt-to-equity ratio of 0.18 and an interest coverage ratio of 53.89, while its return on equity (ROE) stands at 33.28%, maintaining the fundamental strength required to absorb large-scale infrastructure investments.
Valuation
Amid temporary concerns over massive AI investment costs and legal noise, including recent controversies surrounding exaggerated Copilot performance, Microsoft's stock price has corrected by about 25% from its peak, currently hovering around the $381.70 level.
As a result, its forward price-to-earnings (Forward P/E) ratio has fallen to around 20x, significantly lowering valuation pressure compared to the previous AI rally.
The PEG ratio, which measures stock price level relative to growth, has also adjusted downward to 1.18x, leading to assessments that Microsoft has secured downside support compared to its big tech peer group.
In comparison to European tech leader SAP, which is showing strength in Germany's DAX backed by robust cloud backlog metrics, Microsoft's stock price correction may be closer to a short-term oversold scenario due to preemptive cost reflection rather than a deterioration of fundamentals.
Expert & Institutional Analysis
Long-term investment ratings for Microsoft from most Wall Street institutions remain heavily biased toward "Buy."
According to TipRanks consensus, Microsoft's average target price ranges between $555 and $559, suggesting a potential upside of over 45% from the current stock price.
Morningstar presents a fair value of $600 for the company, maintaining an optimistic scenario that Azure's revenue will reaccelerate once the ongoing infrastructure supply constraints are resolved.
On the other hand, Deutsche Bank analyzed that massive capital expenditures on data centers could limit free cash flow (FCF) generation in the short term, and warned that the catch-up speed of the relatively cheaper open-source AI camp should not be overlooked.
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Risk Factors
The most immediate risk is the potential for margin pressure caused by bottlenecks in the supply of high-performance AI chips and rising costs of data center equipment materials.
In addition to GPU semiconductors, the cost of expanding power grids and the high prices of basic raw materials like copper, which is heavily used in power infrastructure construction, are practical factors hindering the efficiency of infrastructure investments.
Geopolitical risks cannot be ignored either.
Escalating US-China tensions or supply chain disruptions in the Taiwan Strait could impose direct constraints on global advanced semiconductor packaging processes, which could slow down MSFT's facility expansion.
At the same time, doubts raised by some regarding the actual efficiency of corporate AI adoption, along with recent class-action lawsuit risks, could slow down conservative corporate clients' adoption of subscription software licenses.
Investment Perspective Summary
The key to the FY2026 Q4 earnings release is proving whether returns are smoothly flowing back relative to the massive investment capital.
If Azure's constant-currency growth rate stably defends the guidance range of 39% to 40% and a clear roadmap for investment recovery is presented in future guidance, the stock is highly likely to strengthen its downside support level.
Conversely, if actual AI-related revenue growth is slow compared to rising capital expenditure costs—revealing further declines in cloud gross margins—the market may discount forward valuations more conservatively.
At a time when macroeconomic uncertainty and geopolitical tensions persist, it seems advisable to closely monitor guidance changes and capital efficiency scenarios presented during the conference call, in addition to verifying the actual earnings figures, before taking action.
Investor Checklist Q&A
Q1. What is Microsoft's Q4 earnings release date and market consensus?
A1. Microsoft's FY2026 Q4 earnings are scheduled to be released after the market closes on July 29, 2026 (local time). The current market consensus expects revenue of approximately $87.7 billion and an EPS of around $4.24.
Q2. Why is the market focusing on the scale of Capital Expenditures (CapEx) in this earnings report?
A2. Because CapEx in the previous quarter surged 84% year-over-year to approximately $30.9 billion, and is expected to exceed $40 billion this quarter. Since astronomical investments put pressure on cash flows and margins in the short term, the market wants to verify if this investment translates immediately into actual cloud revenue (Azure AI).
Q3. What is Microsoft's valuation status following the recent stock price correction?
A3. Due to concerns over massive expenditures over the past year, the stock price has fallen by approximately 25% from its peak, dropping to the $381.70 level. Consequently, the forward P/E has dropped to around 20x, and the PEG ratio, representing stock price attractiveness relative to growth, has fallen to 1.18x, highlighting its relative valuation merit.
Q4. Do fluctuations in commodity prices, such as copper and oil, affect data center infrastructure construction?
A4. Large amounts of copper are essential for data center expansion and transmission grid installations, and massive energy is consumed during operation. High oil prices driven by geopolitical risks and soaring LME copper prices hovering around $13,600 per ton act as cost-escalating factors that indirectly push up infrastructure construction unit costs for big tech firms.
Q5. What is the most critical financial metric for investors to monitor on the day of the earnings release?
A5. The top priority is whether Azure's actual revenue growth rate on a constant-currency basis meets the company's guidance of 39% to 40%. Additionally, investors should closely monitor the trend of commercial Remaining Performance Obligations (RPO), which represents the order backlog, and how resiliently the cloud gross margin is defended amid rising capital expenditures.