Microsoft stock slides ahead of earnings as Q1 GDP drops

Microsoft stock sinks on a lower Q1 GDP reading on Wednesday.
Preliminary US GDP for Q1 shows a QoQ slide of 0.3% annualized.
Microsoft is set to release fiscal Q3 earnings after the close on Wednesday.
Earnings call will revolve around European cloud expansion, tariffs and US data center investment pause.

Clay Webster FXStreet

Microsoft (MSFT) stock fell about 2% near the open on Wednesday after the United States (US) Bureau of Economic Analysis reported that US GDP in the first quarter fell 0.3% QoQ on an annualized basis. Economists had expected a 0.2% reading, and the preliminary reading looks awful when compared to the 2.4% figure from Q4 2024.

Microsoft shares have been rising lightly over the past week ahead of Wednesday's fiscal Q3 post-market earnings release. Wall Street expects the tech stalwart to report earnings per share (EPS) of $3.22 on revenue of $68.44 billion for the quarter ending in March.

The broader market is also selling off in light of the GDP figure. The Dow Jones Industrial Average (DJIA), which includes Microsoft, trended 1.6% lower near the start of Wednesday's session, while the tech-focused NASDAQ Composite lost a resounding 2.5%.

The S&P 500, which decreased about 2% at the time of writing, is the latest casualty of analyst revisions due to the Trump administration's enaction of tariffs. HSBC cut its optimistic 6,700 year-end target all the way to 5,600. The index trades near 5,447 on Wednesday morning.

Microsoft stock news

Microsoft executives, however, do not seem to be worried about the year ahead. The company announced on Wednesday morning in the runup to the earnings release that it plans on doubling its data center infrastructure in Europe by 2027 from 2023 figures. This will amount to the company's Azure cloud segment operating more than 200 data centers on the counterpart by the end of 2027.

Microsoft has already been investing steadily over the past two years and says it will add another 40% to capacity in the next two. The plan announced on Wednesday mentions investments in 16 European nations.

Microsoft outlined its five leading goals with this European expansion:

Build a broad AI and cloud ecosystem across Europe
Uphold Europe’s digital resilience despite geopolitical volatility
Continue to protect the privacy of European data
Defend European cybersecurity
Strengthen Europe’s economic competitiveness, particularly for open source.

Earlier this year, Microsoft claimed it would spend as much as $80 billion on data centers in this fiscal year alone. But analysts began to wonder about the company's sincerity when it began slowing investments in several early-stage US facilities at the start of the year. Management simply stated at the time that they decided to remain agile with their capex rollout.

Investors will surely have further questions during the earnings call later on Wednesday as to how the C-suite is viewing those paused projects. Other questions will revolve around Microsoft's outlook on tariffs and how they will alter the company's guidance this year.

Microsoft stock forecast

Microsoft shares have only just regained the $385 to $390 former support band after falling into a clear downtrend over the past two months. A poor earnings performance or guidance retraction later on Wednesday will almost certainly send MSFT back below $385, once again losing the 50-day Simple Moving Average (SMA). In that case, Microsoft stock will probably retest the $345 to $360 range.

MSFT daily stock chart

A beat-a-raise quarter, however, could propel the share price back into the $400 to $410 upper support range. The 200-day SMA remains the goal for bulls as it now circles $414.

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

USD/JPY retreats from nearly two-year high on hawkish BoJ Minutes

USD/JPY drifts lower during the Asian session on Friday, retreating further from its highest level since July 2024, set the previous day. Minutes from the April BoJ meeting keep further policy normalization firmly on the table amid expectations for a pickup in inflation over the coming months, due to higher energy costs. This offsets Japan's softer National CPI print and lifts the Japanese Yen amid intervention fears, exerting some pressure on the currency pair.

AUD/USD awaits 0.7000 breakdown before the next leg down amid bullish USD

AUD/USD holds above 0.7000 during the Asian session on Friday, though it remains close to the weekly low and seems poised to register modest weekly losses. The US Dollar sits near its highest level since May 2025 as the Fed's hawkish tilt overshadows optimism over the US-Iran peace deal, capping the currency pair. However, the RBA's signal that additional rate hikes were possible if inflation persists lends some support to the Aussie.

Gold refreshes weekly low as Fed's hawkish tilt underpins USD

Gold attracts sellers for the third consecutive day and weakens below $4,200, hitting a fresh weekly low during the Asian session on Friday. Despite the latest optimism over a US-Iran peace deal, the Fed's hawkish tilt helps the US Dollar to preserve its strong weekly gains to the highest level since May 2025. This, in turn, undermines the non-yielding bullion and backs the case for further losses.

Ethereum: Tokenization and network activity skyrocket in Q1 despite DeFi contraction

Following months of crashing prices and macro-driven fragility, Ethereum saw mixed performance across key metrics in the first quarter of 2026, according to Token Terminal. In its quarterly Ethereum report, the onchain analytical platform highlighted contraction across DeFi-focused metrics such as lending, trading volume and fees, while tokenization and throughput expanded.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.

The next big AI trade may not be about chips or software

Artificial intelligence has already created some of the biggest winners in modern market history. Chipmakers have surged, data centre construction is booming, and electricity demand forecasts are changing globally.