Q2 FY26 earnings beats — Azure/capex/analysts/defense tailwinds; Q3 preview
Key Questions
What were Microsoft's key Q2 FY26 earnings results?
EPS was $4.14 on revenue of $81.27B (+17%), H1 revenue $159B, capex $49B. Azure grew +39%, cloud revenue $51.5B, remaining performance obligations (rPO) $625B ($233B Azure), AI +230%, LinkedIn +9%, Copilot 16.1M seats (+160% YoY).
How has Microsoft stock performed recently and what is its valuation?
Stock traded at $368-373, down 31% from peak, 19-22x P/E discount, 23% YTD drop (-21-29% YTD). Analysts see it as undervalued amid rotation pressures.
What are the analyst ratings and price targets for Microsoft?
ABR 1.24 (42 Strong Buys), Zacks #2 Buy/$17.10 FY26 EPS (up 0.4%). Targets include Benchmark $450, UBS $510 (cut), BofA $500, Evercore $580-595, RBC $640; Goldman/Morningstar buy ratings.
What tailwinds are supporting Microsoft's growth?
Defense AI via Wedbush picks (MSFT/PLTR/ORCL), $1T CIO tech rotation. Q3 EPS guide $4.04, FY $16.46 amid Azure scrutiny; Apr 28 earnings key.
What is the outlook for Q3 FY26 earnings?
Expectations focus on sustained Azure/AI growth despite slowdown scrutiny. Forward estimates point to double-digit growth at rare valuation discount.
Why do analysts recommend buying Microsoft stock now?
Goldman sees buying opportunity in bruised Big Tech; Zacks upgrade to #2 Buy. Strength in Azure, AI adoption, core business buffer despite 28.6% drop.
How is LinkedIn contributing to Microsoft's results?
LinkedIn revenue rose 9% to $4.71B, driven by growth in marketing solutions.
What market dynamics are influencing Big Tech stocks like Microsoft?
Great rotation with Dow at 50K, Mag7 stabilization efforts, Wall Street bullish chorus growing louder.
EPS $4.14/rev $81.27B +17%/H1 $159B/capex $49B, Azure +39%/cloud $51.5B/$625B rPO ($233B Azure)/AI +230%, LinkedIn +9%; Copilot 16.1M seats +160% YoY; stock $368-373 -31% peak (19-22x P/E discount, 23% YTD drop, -21-29% YTD); ABR 1.24 (42 Strong Buys), Zacks #2 Buy/$17.10 FY26 (up 0.4%), Benchmark Buy/$450 init, UBS $510 (cut)/BofA $500/Evercore $580-595/Benchmark $450/Zacks #2/RBC $640, Goldman/Morningstar buy/undervalued; Wedbush MSFT/PLTR/ORCL defense AI; $1T CIO rotation; Q3 EPS $4.04/FY $16.46 guide amid Azure slowdown scrutiny; Apr 28 key.