How to Trade Microsoft After Q3 2026 Earnings
Founded in 1975 and headquartered in Redmond, Washington, Microsoft Corporation (NASDAQ: MSFT) is one of the world's largest technology companies, operating across cloud computing, enterprise software, productivity tools, gaming, and artificial intelligence. Its products include the Azure cloud platform, the Microsoft 365 suite of productivity applications, LinkedIn, Dynamics 365, and the Xbox gaming ecosystem, serving both individual consumers and large enterprises globally.
The company recently reported its results for the third quarter of fiscal year 2026. Here is a closer look at its performance and what analysts are forecasting for the stock.
The information in this article is provided for educational purposes only and does not constitute financial advice. Consult a financial advisor before making investment decisions.
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Microsoft's Q3 2026 Earnings Performance Summary
Key Takeaways
- Total revenue reached $82.9 billion, up 18% year-on-year (YoY), driven by sustained demand for cloud and AI services. Microsoft Cloud revenue rose 29% YoY to $54.5 billion.
- Profitability improved across the board, with operating income up 20% YoY to $38.4 billion and net income rising 23% YoY to $31.8 billion. Diluted earnings per share (EPS) grew 23% YoY to $4.27.
- Performance across Microsoft's three segments was mixed:
- Productivity and Business Processes, which includes Microsoft 365, LinkedIn, and Dynamics 365, generated $35.0 billion in revenue, up 17% YoY. Within this, Microsoft 365 Consumer cloud revenue grew 33% YoY, Dynamics 365 rose 22% YoY, and LinkedIn increased 12% YoY.
- Intelligent Cloud, which houses Azure, posted $34.7 billion in revenue, up 30% YoY. Azure and other cloud services revenue grew 40% YoY.
- More Personal Computing, which covers Windows, Xbox, Surface, and Bing search, generated $13.2 billion in revenue, down 1% YoY. Windows OEM (Original Equipment Manufacturer) and Devices revenue declined 2% YoY, Xbox content and services fell 5% YoY, while search advertising revenue excluding traffic acquisition costs grew 12% YoY.
- On the outlook, management guided for capital expenditure (CapEx) of over $40 billion in the upcoming fiscal fourth quarter, with full-year calendar 2026 CapEx now expected to reach approximately $190 billion, well above the $154.6 billion analysts had anticipated heading into the print.
- Satya Nadella, Chairman and Chief Executive Officer of Microsoft, framed the quarter around the company's AI momentum. He said: "We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era." Amy Hood, Executive Vice President and Chief Financial Officer, added: "We delivered results that exceeded expectations across revenue, operating income, and earnings per share, reflecting strong execution and growing demand for the Microsoft Cloud."
Source: Microsoft FY26 Q3 Press Release and Earnings Conference Call
Microsoft’s 12-Month Analyst Stock Price Forecast
According to 35 Wall Street analysts, polled by TipRanks, offering a 12-month stock price forecast for Microsoft over the past 3 months:
- Buy Ratings: 33
- Hold Ratings: 2
- Sell Ratings: 0
- Average Price Target: $559.98
- High Price Target: $680.00
- Low Price Target: $400.00
Trading Strategy Example: Microsoft Corp.
The following trading examples are for educational purposes only and do not constitute investment advice. Investors should conduct independent research before making trading decisions. An example trading idea for the Microsoft share price could be as follows:
Remember, markets are volatile, and Microsoft’s share price can fluctuate and may even trend lower.
While the company delivered a strong quarter, the stock still fell in the session following the results. Broader concerns have weighed on the share price in 2026, including questions over the returns on Microsoft's substantial AI infrastructure spending.
Furthermore, management stated it expects to invest roughly $190 billion in capital expenditure for calendar year 2026, well above what analysts had anticipated, raising concerns about the pressure this places on free cash flow. Free cash flow for the quarter, the cash generated after capital spending, declined 22% YoY to $15.8 billion, even as reported profits rose sharply.
More broadly, Microsoft operates in a rapidly evolving and increasingly competitive environment across cloud and AI, where execution risk, regulatory scrutiny, and the pace of return on infrastructure investment could all influence the stock's trajectory in either direction.
How to Buy Microsoft Stock in 4 Steps
- Open an account with Admirals and complete the onboarding process to access the dashboard.
- Click on Trade or Invest on one of your live or demo accounts to open the web platform.
- Search for your stock in the search window at the top.
- Input your entry, stop-loss and take profit levels in the trading ticket.
Do You See the Microsoft Stock Price Moving Differently?
If you believe there is a higher chance that the share price of Microsoft will move lower, then you can also trade short using CFDs (Contracts for Difference). However, these have higher associated risks and are not suitable for all investors. Learn more about CFDs in this How to Trade CFDs article.
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