Wall Street wants proof that AI and cloud momentum can survive tariff turbulence
Analysts expect Microsoft to post earnings of about $3.20 per share, up 8.8% from a year ago, on revenue of $68.38 billion, a 10.6% gain year-over-year.
But with the Nasdaq $NDAQ down 10% since the new year — harder hit than the Dow or S&P — the stakes are unusually high. Strong results may not be enough, especially coming off years of Big Tech dominance in the broader market, and with pessimism deepening. The uncertainty brought on by Trump’s tariffs is making the need for clear, confident growth signals even more urgent, and as we head into a pivotal week, Wall Street is hoping for signs of continued momentum, especially around AI and cloud spending.
Consensus estimates, based on 15 analysts tracked by Nasdaq, show relatively moderate expectations for Microsoft. But even slight misses or cautious commentary could rattle a market sensitive to signs of slowing momentum. Microsoft’s earnings growth is now projected at 12.3% per year, roughly in line with or slightly above broader U.S. market expectations.
Last quarter, Microsoft delivered strong headline numbers — revenue rose 12% to $69.6 billion and earnings per share hit $3.23 — but shares still slid after-hours as Azure’s growth came in at the low end of projections. Supply constraints at Microsoft’s data centers, even as booming AI demand pushed annualized AI business revenue above $13 billion, added pressure. Microsoft stock is now down around 8% year to date.
The good news: Demand for AI and cloud remains fairly firm despite tariff turbulence.
“Software is the safety blanket in this storm,” Wedbush analysts wrote last week, calling Microsoft one of the “Big 3” hyperscalers best positioned to weather near-term uncertainty.
Jefferies (JEF) analysts similarly describe Microsoft’s setup as “derisked,” noting the stock’s valuation has compressed 13% since its last earnings report. Microsoft now trades at about 24 times expected 2026 earnings, a discount compared to other big players, which could some offer some protection against deeper downside. The stock simply doesn’t have as far to fall as some of its peers.
Hightower’s Stephanie Link noted that 55% of Microsoft’s revenue comes from enterprise and PC sectors — areas where CTOs aren’t aggressively spending right now. While cloud and AI budgets are being protected, traditional enterprise IT spending is slowing. Azure growth is expected to clock in around 30% this quarter, a deceleration from 40% growth last quarter.
With deal closure rates “all over the map,” per Wedbush, and CIOs growing more cautious about new commitments, investors may have to look past a bumpy few quarters. Either way, Microsoft’s results — and especially its outlook — will help set the market’s overall tone throughout 2025.
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