Live: Will Microsoft’s Q3 Earnings Snap Its Long Losing Streak?

It’s a night of surging capex across the biggest technology companies.

• Alphabet is raising their spend forecast for the year up to $190 billion on the high end, and said they expect “2027 capex to significantly increae compared to 2026.”
• Meta Platforms raised their annual forecast for capex to $145 billion on the high-end.

And Microsoft, which hadn’t updated its capex guidance, also joined the party today. Here’s what CFO Amy Hood said on tonight’s call:

“For calendar year 2026, we expect to invest roughly $190 billion in capital expenditures, which includes approximately $25 billion from the impact of higher component pricing. We remain confident in the return on these investments, given higher demand signals and increasing product usage as well as the efficiencies we’re already driving across the platform.

Even with these additional investments and continued efforts to bring GPU, CPU and storage capacity online faster, we expect to remain constrained at least through 2026. Despite these constraints, and the continued need to balance incoming supply. We expect Azure growth to show modest acceleration in the second half of the calendar year compared with the first half. ”

This quote of ‘modest acceleration’ was enough to move shares higher. Investors have been concerned Azure is losing market share to rivals like Alphabet. Google Cloud announced stunning 63% growth tonight.

Microsoft’s conference call is ongoing and CEO Satya Nadella opened his portion of the call, highlighting Microsoft’s capacity additions.

Microsoft backed out of several deals in early 2025 and now finds its stock sliding due to Azure growth rates that have disappointed Wall Street. Both Alphabet and Meta increased their capital spending plans for 2026 (again) during tonight’s earnings call. So, it’s important for Nadella to defend Microsoft’s investment in this space.

Here’s what Nadella had to say:

“Today, I’ll focus my remarks on both priorities, starting with infrastructure. We’re optimizing every layer of the tech stack from DC design to silicon to system software, the model architecture as well as its optimization. This is translating into operational gains. We have reduced, [ docked the ] life times for new GPUs in our biggest regions by nearly 20% since the beginning of the year. Our Fairwater data center in Wisconsin came online earlier this month, 6 weeks ahead of schedule, allowing us to recognize revenue earlier. And we delivered a 40% improvement in inference throughput for our most used models across Copilot driven by our software and hardware optimization work.

All up, we added another gigawatt of capacity this quarter and remain on track to double our overall footprint in just 2 years. We are moving aggressively to add capacity aligned to our demand signals we see and we have announced new data center investments across 4 continents. We also continue to modernize our fleet with our first-party innovation alongside the latest from NVIDIA and AMD. Across our fleet, millions of servers are powered by our custom networking security and virtualization silicon, including Azure Boost as well as our first-party CPUs and accelerators.

Our Maia 200 AI accelerator, which offers over 30% improved tokens per dollar compared to the latest silicon in our fleet is now live in our Iowa and Arizona data centers. Our Cobalt server CPU is deployed in nearly half of our DC regions running workloads at scale for customers like Databricks, Siemens, and Snowflake. As our largest customers scale their AI deployments, they’re increasingly leveraging other services across our platform and choosing to run those workloads on Cobalt. And we are expanding Cobalt supply significantly to meet this demand.”

Microsoft deliberately does not include Q4 guidance in the press release. That comes on the conference call at 5:30 p.m. ET and it is the single most important data point of the entire evening for MSFT shareholders.

Last quarter Amy Hood guided Q3 revenue of $80.65 to $81.75 billion. The actual number came in at $82.9 billion, a beat of more than a billion dollars above the top end. If she guides Q4 with similar conservatism and the range tops Wall Street’s expectations, shares should reverse the current after hours decline.

The key numbers to watch on the call are Q4 revenue range versus the Street’s current estimate of roughly $84 billion, Azure growth guidance for Q4 versus the 40% just delivered, and any commentary on whether capital expenditures are tracking to decrease sequentially as promised last quarter.

Microsoft is down 11% year to date. Tonight’s numbers deserved a better reaction. The conference call is the last chance to get it.

Azure grew 40% in constant currency, beating the 37% to 38% guidance range that had been the central anxiety heading into tonight. Amy Hood had noted last quarter that Azure would have topped 40% if all new GPUs had been allocated there. Tonight it hit 40% anyway. That is a meaningful result.

Microsoft’s AI business surpassed a $37 billion annual revenue run rate, up 123% year over year. That number from Satya Nadella’s opening remarks is the clearest evidence yet that the massive capex spend is translating into recognized revenue at scale.

Microsoft Cloud revenue hit $54.5 billion, up 29%. That is the first time Microsoft Cloud has crossed $50 billion in a quarter and it crossed it by a significant margin.

Commercial remaining performance obligations grew 99% to $627 billion. That backlog is the clearest forward visibility signal in the entire report and it is extraordinary.

Intelligent Cloud revenue grew 30% to $34.7 billion. The one weak spot remains More Personal Computing, which declined 1%, but that segment is a small and shrinking part of the overall story.

This is becoming a pattern with Microsoft. Beat on revenue, beat on EPS, beat on Azure, and still trade lower after hours.

Shares are down 1.49% despite a quarter that delivered $82.9 billion in revenue against an $81.4 billion estimate, EPS of $4.27 against a $4.06 estimate, and Azure growth of 40% in constant currency that cleared the 37% to 38% guidance range with room to spare.

The AI business surpassing a $37 billion annual revenue run rate growing 123% year over year is exactly the kind of number investors have been waiting for. Microsoft Cloud revenue of $54.5 billion grew 29%. Commercial remaining performance obligations hit $627 billion, up 99%.

Microsoft beat on every metric tonight and shares are still down 1.49% after hours.

This is the same story we saw last quarter when the stock fell nearly 10% despite a solid beat. The market is not trading Microsoft on what it just reported. It is trading on what comes next, specifically guidance and any commentary on whether Azure growth can sustain the 40% pace into next quarter.

Revenue of $82.9 billion and EPS of $4.27 both topped expectations. Azure grew 40% in constant currency, beating the 37% to 38% guide. The AI business hit a $37 billion annual run rate, up 123% year over year. By any normal standard this is an excellent quarter.

But Microsoft shares are down 11% year to date and investors have been burned before by strong prints followed by cautious guidance. The conference call starts at 5:30 p.m. ET and what Amy Hood says about Q4 revenue guidance and capital expenditure trajectory will matter far more than anything in tonight’s press release.

Stay on this page for updates as the call progresses.

Beyond the Azure growth number discussed earlier, four numbers matter on the call: capex pacing after Q2’s $29.88B (+89% YoY) outlay, Microsoft Cloud gross margin trajectory, Commercial RPO follow-through from $625B (+110% YoY), and Copilot monetization color.

Bullish setup: Azure guided above 38%, capex moderating relative to revenue, reassuring margin commentary. Bearish setup: Azure below 37%, capex stepping higher without revenue payoff, Copilot adoption soft. Management historically guides conservatively on Azure, so any deceleration signal would land harder than usual.

Microsoft’s stock has rebounded off its bottom today, but the company shares are still down more than 1%. The company will report Fiscal Q3 earnings after the bell today. It’s one of several massive tech companies reporting shortly after the bell.

The biggest figure Wall Street will be closely paying attention to tonight is likely Microsoft’s Azure guide. Last quarter Microsoft delivered 39% growth in the unit, but that disappointed the Street.

Even more disappointing was the forward guidance down to 37% to 38% this quarter.

That growth rate may look outstanding, but consider that some widely-followed firms were actively discussing Azure hitting a 50% growth rate by the end of calendar 2026. Put another way, Azure’s growth is outstanding, but it came in below what was beginning to be ‘priced in’ to the stock.

Guidance may be more important tonight because Microsoft has already signaled they’re supply-constrained on Azure’s Q3 growth rate. So, guidance on Q4 growth will reveal whether or not this constraint will persist, or whether Azure might begin growing again throughout the rest of calendar 2026.