Microsoft and Meta Earnings Preview: AI-Driven Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 hours ago
0mins
Should l Buy MSFT?
Source: NASDAQ.COM
- Microsoft's Strong Earnings: In its second quarter of fiscal 2026, Microsoft reported non-GAAP earnings per share of $4.14, a 24% year-over-year increase that exceeded analyst expectations, highlighting the robust appeal of its cloud computing business despite intense AI competition.
- Meta's Impressive Revenue Growth: Meta's revenue surged nearly 24% year-over-year to nearly $60 billion in its most recent quarter, indicating the effectiveness of its strategy to leverage AI for optimizing content and advertising algorithms, which enhances user engagement and ad impressions.
- Significant Capital Expenditure Increase: Both companies are signaling a substantial rise in capital expenditures for 2026, with Meta projecting between $115 billion and $135 billion, which may pressure free cash flow, although CEO Zuckerberg remains optimistic about long-term returns.
- Intensifying Market Competition: Microsoft faces competition from giants like Alphabet and Amazon in software sales, while Meta capitalizes on its network effect with 3.6 billion daily active users, using AI to enhance profitability on its social media platforms, showcasing differing investment appeals.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy MSFT?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 422.790
Low
500.00
Averages
631.36
High
678.00
Current: 422.790
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company. The Company develops and supports software, services, devices, and solutions. The Company’s segments include Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services. This segment primarily comprises: Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions. The Intelligent Cloud segment consists of server products and cloud services, including Azure and other cloud services, SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs), and Nuance and GitHub; and Enterprise Services, including enterprise support services, industry solutions and Nuance professional services. The More Personal Computing segment primarily comprises Windows, Devices, Gaming, and search and news advertising.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Microsoft Stock Down 22% Faces Challenges Ahead of Earnings
- Cloud Backlog Concerns: Microsoft has a staggering $625 billion cloud order backlog, with $281 billion attributed to OpenAI, which has reduced its computing capacity spending forecast, leading to decreased market confidence in the backlog and potential revenue growth.
- Upcoming Earnings Report: Microsoft is set to release its fiscal 2026 Q3 earnings on April 29, with investors eager for updates on AI products like Copilot and the Azure cloud platform to assess market performance and growth potential.
- Copilot Adoption Surge: As of December 31, Copilot licenses sold for enterprise 365 reached 15 million, representing a modest 3.7% penetration but showing a robust 160% year-over-year growth, indicating strong market demand and future growth potential.
- Valuation Appeal: With a current P/E ratio of 26.4, below its five-year average of 32.9, Microsoft stock appears undervalued, and if the earnings report alleviates backlog concerns, the stock could rebound significantly, offering substantial returns for investors.
See More
CITIGROUP LOWERS MICROSOFT'S TARGET PRICE FROM $635 TO $600
- Microsoft Target Price Adjustment: Citigroup has reduced Microsoft's target price from $635 to $600.
- Market Impact: This adjustment reflects Citigroup's analysis of Microsoft's market performance and future prospects.
See More
Investment Opportunities in AI and Quantum Computing
- Surge in Capital Expenditure: In 2026, leading hyperscalers are expected to collectively invest approximately $600 to $650 billion, primarily directed towards AI infrastructure, which will enhance market share and profitability for these companies.
- Integration of Quantum Services: Companies like Microsoft, Alphabet, IBM, and Amazon are embedding quantum capabilities into their platforms, launching a 'quantum-as-a-service' model that accelerates enterprise experimentation and generates incremental revenue, showcasing their first-mover advantage in the quantum market.
- Technological Integration Advantage: Ecosystem leaders like NVIDIA are enhancing quantum system stability and error mitigation through AI-driven tools, indicating that quantum computing will scale as part of a broader AI stack, thereby boosting investor confidence.
- Microsoft's Market Outlook: Microsoft is projected to achieve a 25.4% earnings growth and a 16.3% revenue growth in 2026, with price targets from 46 analysts suggesting a 38.6% increase in stock price, reflecting positive market expectations for its AI-quantum integration strategy.
See More
ServiceNow Q1 2026 Earnings Forecast Highlights Growth Amidst Competition
- Revenue Growth Outlook: ServiceNow anticipates Q1 2026 revenues of $3.75 billion, reflecting a 21.4% year-over-year increase, showcasing robust performance in the cloud platform sector despite intense competition.
- Earnings Improvement: The expected earnings per share of $0.95 indicates a 17.3% growth from the previous year, highlighting the company's success in customer retention and enterprise expansion, which is likely to drive future profitability.
- Expanding Customer Base: By the end of 2025, ServiceNow served over 8,800 global customers, with more than 85% being Fortune 500 companies, demonstrating widespread adoption of its cloud platform among large enterprises and enhancing its competitive edge.
- Increasing Market Challenges: Although the company expects subscription revenues between $3.65 billion and $3.67 billion for 2026, strong competition from AI solutions is projected to create a 150-basis-point headwind to revenue growth, indicating a complex market environment.
See More
NABTU and Microsoft Broaden National Initiative to Enhance AI Training and Career Opportunities in Skilled Trades
Expansion of Initiative: Microsoft is expanding its initiative to strengthen AI training and career pathways across skilled trades.
Focus on Skilled Trades: The initiative aims to enhance opportunities and resources for individuals pursuing careers in skilled trades through AI training.
See More
Apple's CEO Transition Raises AI Strategy Questions
- CEO Transition: Apple announced that Tim Cook will step down as CEO on September 1, with John Ternus taking over; Ternus, who has been with the company for 25 years, faces significant challenges in advancing the company's AI strategy.
- Strong iPhone Sales: In the latest quarter, Apple's iPhone revenue surged 23% year-over-year to $85.3 billion, primarily driven by robust sales of the iPhone 17 models, indicating strong consumer demand for new products.
- Lagging AI Strategy: Despite Apple's relatively conservative investment in AI, relying on Google's Gemini to enhance Siri features, the market's demand for AI-integrated hardware is growing, and Ternus must accelerate the application of AI technologies.
- Future Product Outlook: Apple plans to accelerate the development of three AI wearables centered around Siri, including smart glasses and AirPods with cameras, indicating potential innovation directions in the AI hardware space.
See More
Microsoft Stock Down 22% Faces Challenges Ahead of Earnings
- Cloud Backlog Concerns: Microsoft has a staggering $625 billion cloud order backlog, with $281 billion attributed to OpenAI, which has reduced its computing capacity spending forecast, leading to decreased market confidence in the backlog and potential revenue growth.
- Upcoming Earnings Report: Microsoft is set to release its fiscal 2026 Q3 earnings on April 29, with investors eager for updates on AI products like Copilot and the Azure cloud platform to assess market performance and growth potential.
- Copilot Adoption Surge: As of December 31, Copilot licenses sold for enterprise 365 reached 15 million, representing a modest 3.7% penetration but showing a robust 160% year-over-year growth, indicating strong market demand and future growth potential.
- Valuation Appeal: With a current P/E ratio of 26.4, below its five-year average of 32.9, Microsoft stock appears undervalued, and if the earnings report alleviates backlog concerns, the stock could rebound significantly, offering substantial returns for investors.
See More
CITIGROUP LOWERS MICROSOFT'S TARGET PRICE FROM $635 TO $600
- Microsoft Target Price Adjustment: Citigroup has reduced Microsoft's target price from $635 to $600.
- Market Impact: This adjustment reflects Citigroup's analysis of Microsoft's market performance and future prospects.
See More
Investment Opportunities in AI and Quantum Computing
- Surge in Capital Expenditure: In 2026, leading hyperscalers are expected to collectively invest approximately $600 to $650 billion, primarily directed towards AI infrastructure, which will enhance market share and profitability for these companies.
- Integration of Quantum Services: Companies like Microsoft, Alphabet, IBM, and Amazon are embedding quantum capabilities into their platforms, launching a 'quantum-as-a-service' model that accelerates enterprise experimentation and generates incremental revenue, showcasing their first-mover advantage in the quantum market.
- Technological Integration Advantage: Ecosystem leaders like NVIDIA are enhancing quantum system stability and error mitigation through AI-driven tools, indicating that quantum computing will scale as part of a broader AI stack, thereby boosting investor confidence.
- Microsoft's Market Outlook: Microsoft is projected to achieve a 25.4% earnings growth and a 16.3% revenue growth in 2026, with price targets from 46 analysts suggesting a 38.6% increase in stock price, reflecting positive market expectations for its AI-quantum integration strategy.
See More
ServiceNow Q1 2026 Earnings Forecast Highlights Growth Amidst Competition
- Revenue Growth Outlook: ServiceNow anticipates Q1 2026 revenues of $3.75 billion, reflecting a 21.4% year-over-year increase, showcasing robust performance in the cloud platform sector despite intense competition.
- Earnings Improvement: The expected earnings per share of $0.95 indicates a 17.3% growth from the previous year, highlighting the company's success in customer retention and enterprise expansion, which is likely to drive future profitability.
- Expanding Customer Base: By the end of 2025, ServiceNow served over 8,800 global customers, with more than 85% being Fortune 500 companies, demonstrating widespread adoption of its cloud platform among large enterprises and enhancing its competitive edge.
- Increasing Market Challenges: Although the company expects subscription revenues between $3.65 billion and $3.67 billion for 2026, strong competition from AI solutions is projected to create a 150-basis-point headwind to revenue growth, indicating a complex market environment.
See More
NABTU and Microsoft Broaden National Initiative to Enhance AI Training and Career Opportunities in Skilled Trades
Expansion of Initiative: Microsoft is expanding its initiative to strengthen AI training and career pathways across skilled trades.
Focus on Skilled Trades: The initiative aims to enhance opportunities and resources for individuals pursuing careers in skilled trades through AI training.
See More
Apple's CEO Transition Raises AI Strategy Questions
- CEO Transition: Apple announced that Tim Cook will step down as CEO on September 1, with John Ternus taking over; Ternus, who has been with the company for 25 years, faces significant challenges in advancing the company's AI strategy.
- Strong iPhone Sales: In the latest quarter, Apple's iPhone revenue surged 23% year-over-year to $85.3 billion, primarily driven by robust sales of the iPhone 17 models, indicating strong consumer demand for new products.
- Lagging AI Strategy: Despite Apple's relatively conservative investment in AI, relying on Google's Gemini to enhance Siri features, the market's demand for AI-integrated hardware is growing, and Ternus must accelerate the application of AI technologies.
- Future Product Outlook: Apple plans to accelerate the development of three AI wearables centered around Siri, including smart glasses and AirPods with cameras, indicating potential innovation directions in the AI hardware space.
See More
