Microsoft (MSFT) is due to report earnings on Oct. 28, 2026, with analysts expecting earnings per share (EPS) of 4.71 and revenue of $90.63B. The report follows a quarter ended June 30, 2026 in which revenue rose 17.7% from a year earlier while free cash flow fell, because capital spending rose faster than operating cash flow. That mix of strong growth, slightly lower margins and heavy AI-related investment is what investors will be checking.
Key facts
- Oct. 28, 2026: Next earnings date. Analysts expect EPS of 4.71 and revenue of $90.63B (consensus estimates, per FMP).
- Quarter ended June 30, 2026 (Q4 fiscal 2026), reported July 29, 2026: Revenue was $90.01B, operating income $40.60B and net income $35.77B. Revenue was 17.7% higher and net income 31.3% higher than a year earlier.
- July 29, 2026 result vs. estimates: EPS of 4.74 against an estimate of 4.24 (a $0.50 beat), and revenue of $90.01B against an estimate of $87.62B.
- Oct. 23, 2026: The stock closed near $524.51, up 0.66% on the day. Its 52-week range is $349.20 to $553.72, and its market value is $3.89T.
- Analyst view: 68 of 83 ratings are Buy and 15 are Hold, with none at Sell. The average price target is $595.21.
What happened
Microsoft has not yet released the coming report, so this is a look at where the company stands going in. In its last report, on July 29, 2026, it beat both the EPS and revenue estimates for the quarter ended June 30, 2026.
Where the growth came from. The largest segment, Server products and cloud services, brought in $37.10B in that quarter, against $27.88B a year earlier. This is the business that includes Azure, Microsoft's cloud computing service. Microsoft 365 Commercial products and cloud services, the workplace software sold to businesses, brought in $27.91B, against $24.32B. LinkedIn revenue was $5.19B, against $4.62B.
Not every area grew. Windows and Devices revenue was $4.01B, lower than the $4.33B a year earlier. Xbox revenue was $4.98B, against $5.53B for the gaming line in the year-ago period. FMP labels the two lines differently, so treat that comparison as approximate. By geography, the United States contributed $46.97B and the rest of the world $43.04B.
Margins. Gross margin is the share of revenue left after the direct cost of delivering products and services. Operating margin is the share left after running costs too. Over the last five quarters:
| Quarter ended | Revenue | Gross margin | Operating margin | Net income | |---|---|---|---|---| | June 30, 2025 | $76.44B | 68.6% | 44.9% | $27.23B | | Sept. 30, 2025 | $77.67B | 69.0% | 48.9% | $27.75B | | Dec. 31, 2025 | $81.27B | 68.0% | 47.1% | $38.46B | | March 31, 2026 | $82.89B | 67.6% | 46.3% | $31.78B | | June 30, 2026 | $90.01B | 67.2% | 45.1% | $35.77B |
Revenue rose in every quarter, but gross margin slipped from 69.0% in the quarter ended Sept. 30, 2025 to 67.2% in the latest quarter. Operating margin fell for three straight quarters after peaking at 48.9%. The December 2025 quarter's net income of $38.46B stands out as higher than the quarters around it. FMP does not say why, so we do not speculate here.
Cash flow. This is the clearest change in the data. Free cash flow is the cash left after a company pays for equipment and buildings.
| Quarter | Operating cash flow | Capital spending | Free cash flow | |---|---|---|---| | Q4 FY2025 (ended June 30, 2025) | $42.65B | $17.08B | $25.57B | | Q1 FY2026 (ended Sept. 30, 2025) | $45.06B | $19.39B | $25.66B | | Q2 FY2026 (ended Dec. 31, 2025) | $35.76B | $29.88B | $5.88B | | Q3 FY2026 (ended March 31, 2026) | $46.68B | $30.88B | $15.80B | | Q4 FY2026 (ended June 30, 2026) | $55.44B | $35.80B | $19.64B |
Operating cash flow in the latest quarter was the highest of the five. Capital spending was also the highest, and roughly double the year-ago level in dollar terms. Free cash flow recovered from the low in the December 2025 quarter but remains below the $25.57B of a year earlier. Microsoft also returned cash to shareholders, with $4.58B of buybacks and $6.76B of dividends in the latest quarter.
Why it matters for investors
Growth is strong, but it is costing more. Revenue and net income are growing quickly, yet margins have edged lower while spending on infrastructure has climbed. Headlines this week describe investor worry about AI spending across big tech, and Microsoft sits at the center of that debate. The company's results will show whether the extra spending keeps translating into cloud revenue.
The balance sheet looks sound. As of June 30, 2026, Microsoft held $76.84B in cash and short-term investments against $128.81B of total debt, for net debt of $107.87B. Shareholders' equity was $442.39B, and debt-to-equity is 0.29. Its Altman Z-score, a bankruptcy-risk gauge where higher is safer, is 9.24. Its Piotroski score, a nine-point measure of financial health, is 6.
Valuation is higher than the peers FMP lists. Over the trailing 12 months, Microsoft trades at a price-to-earnings (P/E) ratio of 29.14, with a net margin of 40.3% and a dividend yield of 0.7%. Its price-to-free-cash-flow is 58.14. Peers FMP lists:
| Company | P/E (trailing) | Net margin | |---|---|---| | Microsoft | 29.14 | 40.3% | | Accenture (ACN) | 18.26 | 11.3% | | Adobe (ADBE) | 14.70 | 28.0% | | Amazon (AMZN) | 19.68 | 17.4% | | Salesforce (CRM) | 22.60 | 22.0% |
Microsoft's net margin is higher than each peer's, which is one reason investors pay a higher multiple. It also leaves less room for disappointment.
What analysts think. The consensus rating is Buy. Price targets average $595.21, with a median of $600.00, a high of $725.00 and a low of $440.00. Recent rating actions were all reiterations, including Guggenheim on Oct. 21, BMO Capital on Oct. 20 and Bernstein on Oct. 19. FMP's own discounted cash flow model, which estimates value from projected cash flows, gives $282.40 per share as of Oct. 25. That is well below the market price and shows how sensitive such models are to their assumptions.
Our MoonshotScore. Stock Expert AI's MoonshotScore V2 rates Microsoft 85.1, labeled Exceptional. Against its sector, the pillars read: quality 89, momentum 87, growth 79, safety 73 and valuation 34. Quality and momentum are the strong areas. Valuation is the weak one, matching the premium multiples above.
Risks. Three stand out from the data:
- Spending. Capital spending is growing faster than free cash flow, and the report could show whether that continues.
- Margins. Gross and operating margins have both drifted lower over the last several quarters.
- Valuation. The stock sits closer to the top of its 52-week range than the bottom, with a weak valuation pillar. Among the 30 most recent insider filings, those in the last 90 days show no open-market purchases and 9 sales. FMP warns that older filings in the window may be missing, and insider sales can have many causes.
What to watch next
- Oct. 28, 2026: the results against the 4.71 EPS and $90.63B revenue estimates.
- Cloud segment growth: whether Server products and cloud services keeps expanding from the $37.10B of the June 2026 quarter.
- Capital spending and free cash flow: whether spending keeps rising and whether free cash flow moves back toward earlier levels.
- Margins: whether operating margin stabilizes after falling from 48.9% to 45.1% over the last four quarters.
- Management commentary: what executives say on the call about AI demand, capacity and spending plans.
- Peers: Alphabet and Amazon also report within days, according to recent headlines, and their results may influence how the whole group trades.
Frequently asked questions
Q: When does Microsoft report earnings?
Microsoft's next earnings date is Oct. 28, 2026. Analysts expect EPS of 4.71 and revenue of $90.63B, according to FMP consensus data.
Q: Did Microsoft beat expectations last quarter?
Yes. For the quarter ended June 30, 2026, reported July 29, 2026, EPS was 4.74 against an estimate of 4.24, and revenue was $90.01B against an estimate of $87.62B. Revenue was 17.7% higher than a year earlier.
Q: Is Microsoft expensive compared with its peers?
On trailing earnings, yes. Microsoft's P/E is 29.14, against 18.26 for Accenture, 14.70 for Adobe, 19.68 for Amazon and 22.60 for Salesforce. Its net margin of 40.3% is higher than each of those peers' margins, which helps explain the gap. Stock Expert AI's valuation pillar for Microsoft is 34, its weakest. This is information, not a recommendation.
This is educational content, not investment advice. Past performance does not guarantee future results.