Microsoft (MSFT) is scheduled to announce its results for the third quarter of Fiscal 2025 after the market closes on Wednesday, April 30. MSFT stock has declined 7% year-to-date due to fears of an economic slowdown sparked by tariff wars. Investors are expected to pay attention to the growth in MSFT’s Azure cloud business and AI revenues, capex outlook, and management’s commentary on the impact of tariffs. Wall Street expects MSFT to report Q3 FY25 EPS (earnings per share) of $3.22, reflecting a year-over-year growth of 9.5%.
Meanwhile, revenue is expected to increase by 10.6% to $68.43 billion. The company’s Azure cloud business and AI-related revenues are being viewed as key growth drivers. However, macro uncertainties could impact their growth rate.
According to Main Street Data, growth in Microsoft’s overall cloud revenue slowed down to 21.4% in Q2 FY25 (December quarter) compared to 22.3% in the previous quarter.
Analysts’ Views Ahead of Microsoft’s Q3 Earnings
Heading into Q3 FY25 results, Goldman Sachs analyst Kash Rangan reiterated a Buy rating on MSFT stock but lowered the price target to $450 from $500. Despite recent macro uncertainty, the 5-star analyst expects Microsoft to “execute well” against his revenue growth estimate of 11%, Azure growth expectation of 31% (32% in constant currency), and EPS of $3.23.
Rangan believes that AI can continue to show traction as capacity comes online and generative AI use-cases move to the application layer. He thinks that the modest weakness in non-AI workloads can be fixed over the coming quarters. The analyst stated that aside from Azure and AI growth, investors will also pay attention to FY26 capex growth, given recent reports about lease adjustments and cancellations.
Finally, Rangan remains confident that MSFT’s FY26 earnings can reaccelerate (+17% compared to +11% in FY25), as Microsoft benefits from the higher-margin inference phase of AI and emerges from a period of high capital intensity. Plus, he noted that Microsoft’s revenue-sharing agreement with OpenAI gives the company strong visibility into FY26 AI revenue.
Likewise, Citi analyst Tyler Radke lowered his price target for MSFT stock to $480 from $497 while maintaining a Buy rating. The 4-star analyst moderated MSFT’s FY26 estimates by three points on average across its three key segments to reflect macro pressures. Radke added that Citi’s intra-quarter checks were mixed, with some notable early renewals in Azure, though CoPilot uptake “was lacking.” For Q3 FY25, he expects Azure to be at the lower end of the 31% outlook, and believes that Azure’s Q4 guidance could decelerate again. The analyst believes that the pullback in MSFT stock following Q2 results offers an attractive entry point.
Here’s What Options Traders Anticipate
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting about a 4.8% move in either direction in MSFT stock in reaction to Q3 FY25 results.
Is Microsoft Stock a Buy, Sell, or Hold?
Ahead of the results, Wall Street has a Strong Buy consensus rating on Microsoft stock based on 31 Buys and four Hold recommendations. The average MSFT stock price target of $480.75 implies about 23% upside potential from current levels.
