Microsoft Announces Earnings Today…Can It Lead a Stock Rebound?

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Even if Microsoft (MSFT) delivers earnings that beat market expectations, concerns that artificial intelligence (AI) bots could disrupt its existing software business are expected to limit a stock rebound.

According to cryptocurrency media outlet Watcher.Guru on July 29 (local time), Microsoft is scheduled to announce its quarterly earnings after the market closes today. As it surpassed market forecasts in the previous quarter, there are expectations for strong earnings again this time, but it is uncertain whether the stock price will turn upward after the earnings announcement.

Analysts expect this quarter's revenue to increase by 14.7% year-over-year. This is 3.4 percentage points lower than the 18.1% growth rate recorded in the same quarter last year. Despite the anticipated high revenue growth rate, Microsoft's stock has fallen by approximately 18% this year.

Gene Munster, Managing Partner at Deepwater Asset Management, pointed out that structural issues facing the company over the next five years are more important than the current earnings report itself. He explained that while the stock might rise by about 7%, the volatility level reflected by the options market after the earnings announcement, this would be missing the bigger issues. He argued that even if Azure's growth continues, a new pricing strategy is needed for Microsoft's core business.

The second risk is the proliferation of AI agents and bots. An increase in users utilizing AI bots instead of working directly in Word or Excel could weaken the value of existing software interfaces. Munster warned that even if Microsoft announces impressive earnings, the threat posed by AI bots will not disappear.

Caution is also growing on Wall Street. Patrick Colville of Scotiabank lowered his price target from $550 to $470, and UBS lowered its target from $510 to $480. Morgan Stanley also adjusted its price target from $650 to $600. The successive price target reductions indicate uncertainty about future performance, but the fact that Microsoft has frequently exceeded market expectations remains a factor supporting rebound hopes.

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