Microsoft stock has barely budged since July. Earnings are about to change that.

Core Viewpoint - Microsoft is expected to have a positive earnings report that could help its stock regain momentum after a period of stagnation since its last earnings release [1][2]. Financial Performance - Microsoft briefly reached a $4 trillion market cap but has since lost momentum, with shares currently at $520.56, remaining flat since the fiscal fourth-quarter earnings report on July 30, while the Nasdaq Composite has increased nearly 9% [2]. - The upcoming fiscal first-quarter 2026 results are anticipated on October 29, with Wall Street forecasting an almost 11% increase in earnings, driven primarily by the Azure cloud-computing unit, which is expected to see revenue growth of over 30% year-over-year [3]. Market Sentiment - Analysts have noted an improvement in sentiment from enterprise customers and partners, with large Azure partners reporting accelerating growth trends [4]. - Despite concerns regarding Microsoft's spending on technology, analysts believe that capital expenditure growth will moderate, with a shift towards more profitable AI growth [5]. Valuation and Investment Outlook - Microsoft's stock is currently trading at a valuation of about 28.5 times earnings forecasts for the next fiscal year, which aligns with its five-year average [6]. - Analysts view Microsoft as a quality tech stock with significant AI growth potential, suggesting it remains a compelling long-term buy [6]. Future Prospects - If the upcoming earnings report is strong, Microsoft could regain its position in the AI momentum market [7].