We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Microsoft is likely to report earnings results on July 29, a key event for AI and tech ETFs.
Azure growth is the key to easing AI ROI concerns and lifting sentiment.
GXPT, VGT and GAMR may react sharply as Microsoft remains a top holding.
Microsoft Corporation (MSFT - Free Report) is set to report fourth-quarter fiscal 2026 earnings results on July 29, 2026 — an event that could become a key catalyst not only for the software giant but also for artificial intelligence (AI)-focused exchange-traded funds (ETFs).
Despite robust growth in its cloud computing and AI businesses, Microsoft has emerged as one of the weakest-performing mega-cap technology stocks in 2026, leaving investors confused, per a The Street article, as quoted on Yahoo Finance.
Unlike Nvidia, shares of which have continued to rally on booming AI demand, Microsoft's stock has fallen 19.3% from the start of the year till July 24, 2026.
Bank of America Anticipates Improvement
Despite the recent weakness, Bank of America analyst Tal Liani remains optimistic on Microsoft. Ahead of the July 29 earnings release, Liani reiterated a Buy rating and maintained a $500 price target, while raising his earnings estimates for the next two fiscal years, per a The Street article, as quoted on Yahoo Finance.
According to Liani, Microsoft is trading at around 19 times his projected fiscal 2027 earnings, well below its five-year average valuation multiple of 29 times. He believes that the market is focusing too heavily on near-term capital expenditure, while overlooking Microsoft's long-term earnings potential, per Yahoo Finance.
Azure Growth Remains Major Catalyst
For investors, Azure's performance is expected to be the single most important metric in the earnings report.
Meeting or exceeding this level would demonstrate that Microsoft's expanding AI infrastructure is successfully converting customer demand into revenues. However, a weaker-than-expected Azure number can reignite concerns over whether Microsoft's enormous AI investments are delivering adequate returns.
Heavy AI Spending Under the Spotlight
The company expects to invest $190 billion in infrastructure, with much of the spending directed toward AI-focused data centers, advanced chips and cloud infrastructure, per Yahoo Finance.
Management argues that today's spending is laying the foundation for substantially higher future revenues. However, investors will closely watch management's commentary on fiscal 2027 capital expenditure plans to determine whether AI spending is beginning to moderate.
Zacks Consensus Estimates for Microsoft
The Zacks Consensus Estimate for Microsoft's fourth-quarter earnings per share (EPS) stands at $4.21, suggesting 15.34% year-over-year growth. For the fiscal year, the consensus EPS estimate stands at $17.32, indicating a 26.98% year-over-year rally.
The Zacks Consensus Estimate for revenues stands at $87.44 billion, implying a 14.39% year-over-year rise. For the fiscal year, the consensus estimate for revenues is pegged at $329.26 billion, suggesting year-over-year growth of 16.87%.
In a nutshell, Microsoft could benefit from AI momentum, Copilot adoption and Azure cloud expansion. Strong Microsoft 365 Commercial demand continues to drive revenue growth. However, AI ROI concerns may act as a headwind for the stock.
Microsoft-Heavy ETFs in Focus
Microsoft remains one of the largest holdings across numerous technology and AI-focused ETFs. A strong earnings report can provide a boost to relevant ETFs.
Conversely, disappointing Azure growth or further increases in AI spending without clear evidence of improving profitability could pressure both Microsoft shares, and the broader AI and technology ETF universe.
Global X PureCap MSCI Information Technology ETF (GXPT - Free Report) is designed to give investors exposure to the U.S. information technology sector. Microsoft holds a weightage of 12.03% in this fund.
GXPT has risen 15.9% from the start of the year till July 24, 2026, with an expense ratio of 0.15% and traded a volume of 100,000 shares. It has an AUM base of $134.9 million and it holds a Zacks ETF Rank #2 (Buy).
Vanguard Information Technology (VGT - Free Report) is one of the popular U.S. technology ETFs, offering low-cost exposure to a wide range of IT companies with a strong emphasis on semiconductors, hardware and software.
Microsoft holds a weightage of 8.28% in this fund. VGT has assets under management worth $138,694 million, along with an expense ratio of 0.09%. The fund trades an average volume of 5,000,000 shares. The fund has risen about 20% year to date. It holds Zacks ETF #1 (Strong Buy).
Amplify Video Game Leaders ETF(GAMR - Free Report) invests in companies across the global video gaming ecosystem that includes companies involved in game development, GPUs, gaming platforms, mobile games, hardware and metaverse-related technologies.
Microsoft holds a weightage of 9.62% in this fund. The fund has an expense ratio of 0.59% and trades an average volume of 1,141 shares with assets under management worth $36.8 million.
View the Zacks #1 Rank List
Image: Bigstock
Can Microsoft Q4 Earnings Boost AI ETFs?
Key Takeaways
Microsoft Corporation (MSFT - Free Report) is set to report fourth-quarter fiscal 2026 earnings results on July 29, 2026 — an event that could become a key catalyst not only for the software giant but also for artificial intelligence (AI)-focused exchange-traded funds (ETFs).
Despite robust growth in its cloud computing and AI businesses, Microsoft has emerged as one of the weakest-performing mega-cap technology stocks in 2026, leaving investors confused, per a The Street article, as quoted on Yahoo Finance.
Unlike Nvidia, shares of which have continued to rally on booming AI demand, Microsoft's stock has fallen 19.3% from the start of the year till July 24, 2026.
Bank of America Anticipates Improvement
Despite the recent weakness, Bank of America analyst Tal Liani remains optimistic on Microsoft. Ahead of the July 29 earnings release, Liani reiterated a Buy rating and maintained a $500 price target, while raising his earnings estimates for the next two fiscal years, per a The Street article, as quoted on Yahoo Finance.
According to Liani, Microsoft is trading at around 19 times his projected fiscal 2027 earnings, well below its five-year average valuation multiple of 29 times. He believes that the market is focusing too heavily on near-term capital expenditure, while overlooking Microsoft's long-term earnings potential, per Yahoo Finance.
Azure Growth Remains Major Catalyst
For investors, Azure's performance is expected to be the single most important metric in the earnings report.
Microsoft has guided for Azure revenue growth in the high-30% to 40%, while Bank of America expects growth of 39-40%, per a The Street article, as quoted on Yahoo Finance.
Meeting or exceeding this level would demonstrate that Microsoft's expanding AI infrastructure is successfully converting customer demand into revenues. However, a weaker-than-expected Azure number can reignite concerns over whether Microsoft's enormous AI investments are delivering adequate returns.
Heavy AI Spending Under the Spotlight
The company expects to invest $190 billion in infrastructure, with much of the spending directed toward AI-focused data centers, advanced chips and cloud infrastructure, per Yahoo Finance.
Management argues that today's spending is laying the foundation for substantially higher future revenues. However, investors will closely watch management's commentary on fiscal 2027 capital expenditure plans to determine whether AI spending is beginning to moderate.
Zacks Consensus Estimates for Microsoft
The Zacks Consensus Estimate for Microsoft's fourth-quarter earnings per share (EPS) stands at $4.21, suggesting 15.34% year-over-year growth. For the fiscal year, the consensus EPS estimate stands at $17.32, indicating a 26.98% year-over-year rally.
The Zacks Consensus Estimate for revenues stands at $87.44 billion, implying a 14.39% year-over-year rise. For the fiscal year, the consensus estimate for revenues is pegged at $329.26 billion, suggesting year-over-year growth of 16.87%.
In a nutshell, Microsoft could benefit from AI momentum, Copilot adoption and Azure cloud expansion. Strong Microsoft 365 Commercial demand continues to drive revenue growth. However, AI ROI concerns may act as a headwind for the stock.
Microsoft-Heavy ETFs in Focus
Microsoft remains one of the largest holdings across numerous technology and AI-focused ETFs. A strong earnings report can provide a boost to relevant ETFs.
Conversely, disappointing Azure growth or further increases in AI spending without clear evidence of improving profitability could pressure both Microsoft shares, and the broader AI and technology ETF universe.
Global X PureCap MSCI Information Technology ETF (GXPT - Free Report) is designed to give investors exposure to the U.S. information technology sector. Microsoft holds a weightage of 12.03% in this fund.
GXPT has risen 15.9% from the start of the year till July 24, 2026, with an expense ratio of 0.15% and traded a volume of 100,000 shares. It has an AUM base of $134.9 million and it holds a Zacks ETF Rank #2 (Buy).
Vanguard Information Technology (VGT - Free Report) is one of the popular U.S. technology ETFs, offering low-cost exposure to a wide range of IT companies with a strong emphasis on semiconductors, hardware and software.
Microsoft holds a weightage of 8.28% in this fund. VGT has assets under management worth $138,694 million, along with an expense ratio of 0.09%. The fund trades an average volume of 5,000,000 shares. The fund has risen about 20% year to date. It holds Zacks ETF #1 (Strong Buy).
Amplify Video Game Leaders ETF(GAMR - Free Report) invests in companies across the global video gaming ecosystem that includes companies involved in game development, GPUs, gaming platforms, mobile games, hardware and metaverse-related technologies.
Microsoft holds a weightage of 9.62% in this fund. The fund has an expense ratio of 0.59% and trades an average volume of 1,141 shares with assets under management worth $36.8 million.