Evercore ISI analysts led by Kirk Materne are heading into Microsoft’s (NASDAQ: MSFT) fiscal Q3 earnings on April 29th with a decidedly bullish outlook.
Consensus is for the multinational to report $4.07 a share of earnings on $81.4 billion in revenue, indicating mid-to-late teens gains in both the top and bottom line.
Ahead of the quarterly release, Evercore sees several “green shoots” for Microsoft shares, which are already up nearly 20% versus their recent low.
Why Evercore ISI sees massive upside in Microsoft stock
Kirk Materne remains bullish on MSFT stock primarily on Azure growth, which he believes will continue to benefit from high demand for AI services.
According to him, the current capacity constraints actually “validate” Microsoft’s dominant market position, as customers wait for specialized AI compute rather than migrating to competitors.
As new data centers come online throughout 2026, the transition from “capacity-constrained” to “revenue-realized” will provide a significant tailwind for Azure’s long-term margin expansion.
Evercore’s $580 price target on Microsoft suggests potential upside of more than 35% from here.
MSFT shares are attractively priced ahead of Q1 earnings
Evercore ISI recommends sticking with Microsoft shares heading into the giant’s Q3 earnings, also because it remains rather attractively priced in 2026.
At 25x forward earnings, the market is underestimating the “flywheel effect” of MSFT’s artificial intelligence (AI) stack – from the silicon layer up to the Copilot applications, it told clients.
Materne also sees the firm’s amended partnership with OpenAI as positive because it offers more predictable long-term economic terms and IP access through 2032.
Microsoft now has more flexibility to pursue a broader “multi-model” AI strategy – like their work with Mistral and Phi-3 – while maintaining its status as OpenAI’s primary cloud partner, he added.
Technicals warrant buying Microsoft Corp
Kirk Materne’s decision to reiterate an “outperform” rating on MSFT shares only days before its Q3 earnings suggests he expects management to record stable margins despite high capex on data centers.
The Evercore ISI analyst also likely expects Microsoft Corp to offer upbeat guidance – reassuring investors that the AI monetisation phase is accelerating, particularly with Office 365 Commercial Cloud.
Heading into the quarterly release, MSFT is trading just below its 100-day moving average (MA).
A decisive break above the $429 level is broadly expected to accelerate upward momentum in the near-term.
Where options data suggests MSFT is headed next
Options traders also seem to believe that Microsoft will push higher after earnings on Wednesday.
According to Barchart, the put-to-call ratio on contracts expiring May 1st sits at 0.39, indicating a strong bullish skew, with the upper price set at $448, indicating potential for 5.77% rally from here.
Note that “Big Short” investor Michael Burry has recently expanded his exposure to MSFT as well
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