Microsoft Stock Forecast: Earnings Expectations and Technical Outlook

Recently, Microsoft (NASDAQ: MSFT) has experienced a strong bullish rally, likely driven by investor optimism ahead of the company’s upcoming earnings report on Wednesday, October 29th, 2025.

With a predicted Q3 EPS of $3.65, representing a 10.6% increase from last year’s Q3 EPS of $3.30, Microsoft appears positioned for a solid earnings report. However, this growth could be somewhat limited, as Microsoft’s share price has already risen 26.3% year-to-date — potentially absorbing some of the anticipated upside.

This possibility is further supported by the large upper wick on the most recent daily candle, which suggests profit-taking and a potential short-term pullback as traders and investors reassess Microsoft’s valuation. Additionally, the RSI indicates overbought conditions, signalling possible overvaluation, reinforced by the fact that Microsoft’s price currently sits above the upper Bollinger Band.

Despite these short-term technical signals, any revaluation may only be temporary. The current pattern could represent a handle formation to an already established cup, indicating that Microsoft stock may remain attractive for long-term investors.

From a valuation perspective, P/E-based calculations suggest price target zones with highs of $732.31 (an upside of 35.14%) and lows of $624.66 (an upside of 15.28%). These estimates align with analyst price targets averaging $628.70 (an upside of 16.02%), reinforcing confidence in Microsoft’s long-term growth potential.

Outlook for Traders and Investors

In the short term, traders should remain cautious due to earnings-related volatility and the potential for a brief retracement. However, for longer-term investors, Microsoft’s strong earnings forecasts, solid fundamentals, and favourable valuation outlook could present compelling buying opportunities.