Microsoft Q1 Earnings: Options Market Anticipates 4.75% Movement
Microsoft (MSFT) is preparing to announce its fiscal Q1 earnings on October 29, following the market’s close. Analysts anticipate a notable 4.75% movement in stock prices based on options pricing. This expected shift notably exceeds Microsoft’s historical average post-earnings move of -0.36%, indicating a potential decline.
Investor Expectations Surrounding Microsoft’s Earnings
The anticipated earnings report reflects a mix of optimism regarding AI developments and concerns about execution risks. As a member of the prominent ‘Magnificent 7’ tech stocks, Microsoft carries high expectations. A failure to meet these expectations could lead to significant stock volatility.
- Earnings Per Share (EPS): Analysts predict an EPS of $3.67, representing an 11.2% increase from last year.
- Projected Revenue: Revenue estimates stand at $75.38 billion, compared to $65.59 billion in the previous year.
Key Focus Areas for Investors
Investors are particularly interested in several aspects of Microsoft’s performance this quarter:
- AI Monetization: Insights into how Microsoft is monetizing its AI capabilities, following its partnership with OpenAI.
- Azure Performance: Updates on the performance of Microsoft’s cloud platform, Azure.
- Copilot Adoption Rate: Information on the adoption rate of Microsoft’s Copilot software.
Wall Street’s Outlook on MSFT
Mizuho analyst Gregg Moskowitz has reaffirmed a Buy rating for Microsoft. He has set a price target of $640, citing the company’s medium- to long-term growth potential related to AI adoption. Moskowitz views the new restructuring deal with OpenAI as mutually beneficial, securing Microsoft’s revenue share, intellectual property rights, and Azure exclusivity.
Additionally, Microsoft holds approximately 27% ownership in OpenAI, further tying its future growth to advancements in artificial intelligence.
Analyst Consensus and Future Projections
Current analyst ratings indicate a Strong Buy consensus for MSFT. In the past three months, 33 analysts have given Buy ratings. The average price target stands at $628.70, suggesting a promising upside potential of 15.57% for investors.
