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Microsoft’s (MSFT) Margins Face Temporary Headwind

finance.yahoo.com · May 7, 2026 · 12:11

Microsoft Corporation (NASDAQ:MSFT) is one of the 8 Best Cloud Computing Stocks To Buy In 2026. Microsoft Corporation (NASDAQ:MSFT) reported its third-quarter fiscal 2026 earnings on April 29. Earnings per share came in at $4.27, marking a 21% increase. Revenue from Azure and other Cloud Services grew 40%. The company reported a gross margin of 68%, which declined year-over-year due to continued spending on AI infrastructure and higher usage of AI products. Strong cloud billings and collections pushed operating cash flow up 26% to $46.7 billion.

Heading into earnings week, Moody’s Corporation announced the next phase of its strategic alliance with Microsoft Corporation (NASDAQ:MSFT), in which the firm’s decision-grade intelligence is directly integrated into Microsoft AI solutions. The agentic workflows and decision-grade intelligence are incorporated into Microsoft 365 Copilot via the Model Context Protocol. In addition, tools like Copilot Chat and the Researcher agent can be used to conduct financial analysis and retrieve company data, making it easier to research without switching between programs.

Microsoft Corporation (NASDAQ:MSFT) is a global technology company that develops and sells a wide range of software, cloud services, devices, and business solutions, serving both individual users and enterprise customers worldwide. Its flagship products include Windows, Microsoft 365, Azure, LinkedIn, and Xbox.

While we acknowledge the potential of MSFT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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