Microsoft Shares Face Crosscurrents Ahead of Earnings

As Microsoft prepares to report its fiscal second-quarter 2026 results on January 28, investors are weighing a complex mix of bullish analyst sentiment, new regulatory scrutiny, and strategic partnerships. The stock, having declined more than five percent over the past four weeks, finds itself at a crossroads defined by its artificial intelligence ambitions.

Adding a note of caution, the Swiss Competition Commission (COMCO) initiated a preliminary investigation into Microsoft’s licensing practices on January 15. The probe follows complaints from private companies, public authorities, and state-owned enterprises regarding significant increases in licensing fees.

COMCO is now assessing whether these allegations warrant a formal investigation. Microsoft has stated it will cooperate with the commission and remains committed to complying with Swiss competition law. This marks another potential regulatory challenge for the tech giant in Europe, albeit one still in its early stages.

Analyst Confidence Anchored in AI and Cloud

Despite near-term headwinds, Wall Street maintains a largely positive outlook. Morgan Stanley reaffirmed its Overweight rating on January 14, issuing a price target of $650 per share. This represents an implied upside of approximately 38 percent from current levels.

The firm’s optimism stems from a proprietary survey of Chief Information Officers (CIOs). The survey indicates that IT leaders expect Microsoft’s revenue to grow 7.3 percent in 2026, a one-percentage-point increase from the projection in the Q2 2025 survey. Microsoft’s Azure cloud platform appears to be a key strength, with 53 percent of all applications reportedly running on it. Surveyed CIOs believe the company will maintain this leadership position over the next three years.

Should investors sell immediately? Or is it worth buying Microsoft?

Strategic Wikipedia Deal Fuels AI Engine

In a significant move for its AI development, Microsoft secured access to Wikipedia’s content repository on January 15. The Wikimedia Foundation confirmed a licensing agreement that grants Microsoft the right to use Wikipedia’s 65 million articles in over 300 languages for training its AI models.

Tim Frank, a Corporate Vice President at Microsoft, emphasized the critical importance of reliable data for advancing AI technology. This agreement provides the company with high-quality training material for its Azure cloud services and Copilot offerings, strengthening its competitive position in the generative AI race.

The Upcoming Earnings Focus

All eyes are now on the quarterly report due January 28. The consensus among the 43 analysts covering the stock is a price target of $630, with the vast majority recommending a Buy; only four advise a Hold.

Key metrics will include the growth rate of Azure, which previously expanded by 40 percent, and the adoption trajectory of Copilot services within enterprises. With a committed backlog of $392 billion and continued investments in data center expansion, Microsoft’s AI narrative remains the central valuation driver for its equity.