|
The REAL Reason Trump Is Invading Iran  For a moment…
Forget about Trump’s ties to Israel. Forget about reports of Iran’s nuclear program. Because my research has led me to believe we’re risking World War 3 with Iran for a completely different reason. Click here to find out what it is. If you have even a single dollar invested in the U.S. stock market, this is going to directly impact you. Discover the reason here.
Additional Reading from MarketBeat
Microsoft Earnings Look Strong, But Investors Focus on RisksSubmitted by Chris Markoch. Date Posted: 4/30/2026. 
Key Points
- Microsoft beat Q3 2026 earnings expectations, driven by 40% Azure growth and surging AI revenue.
- Rising CapEx and OpenAI concerns weighed on sentiment despite strong underlying fundamentals.
- Analysts still see significant upside for MSFT, suggesting the pullback may be a buying opportunity.
- Special Report: Nobody Understands Why Trump Is Invading Iran (here’s the answer)
Earnings reports are like progress reports: they require investors to digest facts and make educated guesses about a company’s future prospects. In the case of Microsoft Corp. (NASDAQ: MSFT), investors appear more focused on future risks than on solid results today. The highlights from the company’s Q3 2026 earnings report include a top- and bottom-line beat. Microsoft reported 40% growth in its Azure cloud-computing segment, beating the high end of its guidance. The company’s AI business is now generating $37 billion annually, a 123% year-over-year increase.
Most investors are reacting to the Iran strikes without understanding the underlying motive driving the decision.
Addison Wiggin, Founder of Grey Swan Investment Fraternity, says there is a hidden reason behind the bombing - and knowing it could change how you position your money right now. Discover the real reason behind the Iran strikes before markets react
Microsoft also said Copilot surpassed 20 million paid seats, up from 15 million in the prior quarter. That remains a small fraction of the company’s overall user base, but the sizable beat shows momentum for a platform that’s ancillary to its core business. Despite the strong report, MSFT fell about 5% the day after earnings. Investors are zeroing in on two issues: the company’s capital expenditures and its relationship with OpenAI. The Basics of Supply and Demand Are Raising CapEx PlansMicrosoft said capital expenditures in the current quarter will exceed $40 billion, bringing the company’s full-year total to $190 billion. CEO Satya Nadella attributed roughly $25 billion (over 60% of the quarterly total) to higher component pricing for GPUs and CPUs. Putting aside what that has meant for a company like Intel (NASDAQ: INTC) and the implications for chipmakers such as NVIDIA (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD), the increased spending is largely driven by simple supply-and-demand dynamics. That’s a cost of doing business, but as Microsoft’s $37 billion in AI revenue shows, it’s a cost that is beginning to deliver returns. A “Cloud” Over the OpenAI RelationshipIn its Q2 2026 report, released in January, Microsoft disclosed a commercial backlog of $625 billion, a 110% year-over-year increase. In the most recent quarter, the company’s remaining performance obligation (RPO)—the closest proxy for backlog—was $627 billion. That’s still 99% YOY growth, but the sequential gain was nearly flat. Context matters: about 45% of the backlog stems from the company’s relationship with OpenAI, including the $250 billion Azure commitment announced in October 2025. In February, OpenAI cut its compute-spending budget for the coming years by more than 50%, from $1.4 trillion to $600 billion. That prompted some investors to question how solid Microsoft’s backlog really is. The recently restructured agreement between Microsoft and OpenAI should allay those concerns. Under the new terms, OpenAI products will remain prioritized for release on Azure, and Microsoft will continue to be OpenAI’s primary cloud provider. That means while Microsoft’s share of OpenAI's business will be less than 100%, the existing payment obligations to Microsoft will continue. The new deal also helps Microsoft reduce cash outflows while maintaining cash inflows and lowering legal risk. Microsoft Is Still an Azure StoryExcluding OpenAI entirely, Microsoft’s underlying RPO still grew 26%—in line with historical norms and a sign that the company’s core commercial business is compounding steadily on its own. More importantly, Azure growth reaccelerated to 40% this quarter after slipping to 38% in Q2, which undermines the bear thesis that Azure is entering a period of structural deceleration. It also suggests the capacity constraints that weighed on Q2 are easing and that real enterprise demand—not just OpenAI commitments—is absorbing Microsoft’s cloud buildout. Psychology Is Winning Over FundamentalsThere was nothing materially wrong with Microsoft’s earnings. A slightly lower Q4 revenue forecast and a marginal slip in operating margin don’t fully explain a drop of over 5% in MSFT the day after earnings. Instead, the reaction reflects a presumption that many things that can go wrong will go wrong: OpenAI revenue could dry up, Azure growth could slow, and the data-center buildout could be called into question. That scenario would also leave Microsoft with less return for the cash coming off its balance sheet. Those fears rest on the belief that an AI bubble is imminent, even when actual earnings results do not support that conclusion. So, should you buy MSFT at this level? To answer that, investors need to consider the stock’s valuation relative to the company’s earnings outlook. Trading at roughly 24x forward earnings and 10x sales, MSFT is not expensive compared with its own history or the premium typically afforded to blue-chip technology stocks. That valuation looks even more attractive if projected earnings growth estimates are too low. Analysts largely remain bullish on Microsoft, though price targets moved lower the day after earnings. The consensus price target of $555.95 still implies about 37% upside—hardly a clearance sale, but a meaningful opportunity for long-term growth. Since hitting a 52-week low at the end of March, the stock has staged a strong rally, and nothing in the new price targets suggests a return to recent lows is warranted. All told, this looks like a reasonable entry point for investors who are comfortable with the company’s long-term AI and cloud opportunities and willing to ride out short-term sentiment-driven volatility. |
