French bank BNP Paribas released a research report suggesting Microsoft's (MSFT.US) fiscal Q4 2026 earnings report and outlook could serve as a positive catalyst for the stock, with revenue growth accelerating and capital expenditure guidance likely to be raised simultaneously.
BNP Paribas analyst Stefan Slowinski stated in the report, "We expect Azure growth of 41% for the fourth fiscal quarter (consensus around 40%), with further acceleration in Copilot seat growth. Considering the fourth quarter is typically a seasonally strong period for bookings, we anticipate 7 to 8 million new seats added this quarter, with an optimistic scenario potentially exceeding 30 million."
He further noted, "For fiscal Q1 2027, we expect Azure growth guidance of 40% to 41% (consensus 40.6%), and M365 Commercial Cloud growth guidance of 15% to 16% (which could reach 17% on a constant currency basis if Copilot seats surpass 30 million)."
For the entire fiscal 2027 year, BNP Paribas forecasts Microsoft revenue growth of 18%, above the consensus estimate of 16.8%, a difference that could act as a catalyst for share price appreciation.
Additionally, BNP Paribas raised its fiscal 2027 capital expenditure forecast for Microsoft by 15% to $262 billion, primarily due to persistent component inflation.
The bank maintains an "Outperform" rating on Microsoft but slightly lowered its price target from $555 to $549.
Microsoft is scheduled to report its fiscal Q4 2026 results after the market close on July 29. The consensus estimate is for adjusted earnings per share of $4.24 and revenue of $87.67 billion.
In the same period of fiscal 2025, Microsoft reported EPS of $3.65 and revenue of $76.44 billion. The company's prior guidance for Q4 Azure growth on a constant currency basis was 39% to 40%.
BNP Paribas's 41% estimate, while only slightly above the 40% consensus, is significant as it suggests Azure growth could still pick up modestly after several quarters of stabilizing around 40%.
Several other institutions share a similarly optimistic outlook. A Goldman Sachs report noted that Q4 Azure growth on a constant currency basis could reach 40% to 41%, with next quarter's guidance likely to remain in this range. HSBC Research expects Azure growth of approximately 39.6%.
The commercialization progress of Copilot is another key focus for this earnings report. BNP Paribas expects 7 to 8 million new Copilot seats this quarter, with an optimistic scenario potentially exceeding 30 million.
Previously, in May, BNP Paribas estimated Copilot seats could exceed 25 million by the end of fiscal 2026. Public data shows that Microsoft's M365 Copilot paid enterprise seats surpassed 20 million in April, representing 160% year-over-year growth in seat count, with weekly active user engagement already on par with Outlook.
Slowinski indicated that user sentiment around Copilot has improved significantly, with engagement in Excel, PowerPoint, and Word continuing to rise, and Microsoft recently highlighting stronger monthly engagement and retention metrics.
Positive feedback on preview products like Copilot Coworker suggests Microsoft is effectively managing competitive AI pressure from rivals like Anthropic.
Notably, Microsoft CFO Amy Hood explicitly stated during the Q3 earnings call that Copilot seat growth would "accelerate again" in the fourth fiscal quarter, indicating management's strong confidence in Copilot's commercialization prospects.
For investors, the Copilot seat count is a core metric for gauging enterprise AI adoption. A figure exceeding 30 million would signal accelerating enterprise AI uptake, while falling below 20 million could raise concerns about the pace of commercialization.
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