Microsoft stock down 22% ahead of April 29 earnings, AI growth in

Microsoft shares are trading 22% below their record high as the company prepares to report fiscal Q3 results on April 29 [1]. The earnings release will spotlight two key AI‑related drivers: the uptake of Copilot across the Microsoft 365 suite and the performance of Azure cloud services, which together could reshape the stock’s valuation.

Copilot, Microsoft’s AI assistant embedded in Windows, Bing, Edge and the enterprise 365 applications, remains in early‑stage adoption. By the end of last year, only 15 million of the roughly 400 million 365 licenses had added the paid Copilot feature—a 3.7% penetration but a 160% year‑over‑year increase [1]. Management is expected to update the growth rate, and analysts will be looking for triple‑digit percentage gains given the low base. A strong adoption signal could justify a higher revenue outlook for the “Productivity and Business Processes” segment, which already serves billions of users worldwide.

Azure continues to be Microsoft’s growth engine. The cloud platform posted at least 39% year‑over‑year revenue growth in each of the first two quarters of FY 2026, driven by massive data‑center investments totaling $118 billion and a $625 billion order backlog as of Dec. 31 [1]. However, about 45% of that backlog—roughly $281 billion—originates from OpenAI, which recently cut its projected computing spend to $600 billion through 2030, down from $1.4 trillion [1]. This revision raises questions about the durability of Azure’s order book, and investors will watch the April 29 filing for clarification on how much of the backlog remains credible.

Valuation metrics suggest upside potential. With a trailing‑12‑month earnings per share of $15.98 and a closing price of $422.79 on April 17, Microsoft’s price‑to‑earnings ratio sits at 26.4, well below its five‑year average of 32.9 and the Nasdaq‑100’s 32.4 [1]. To align with its historical multiple, the stock would need to rise about 24%, a move that could be triggered by reassuring Azure backlog numbers and robust Copilot growth.

The upcoming earnings report will test whether Microsoft can translate its AI investments into sustainable revenue growth. If the company clarifies the OpenAI‑related backlog risk and demonstrates accelerating Copilot adoption, the stock may rebound sharply; otherwise, the 22% discount could linger, keeping investors on edge.