Options imply ~7% post-earnings swing in Microsoft

Microsoft reports fiscal third-quarter results after the market closes Wednesday, April 29, with options traders bracing for a swing of roughly 6% to 7%. (microsoft.com) (barchart.com) Barchart showed a 6.24% expected move into the May 1 weekly expiration as of April 28, equal to about $26.78 above or below Microsoft’s $429.25 close. (barchart.com) (microsoft.com) A separate TipRanks preview distributed by Yahoo Finance put the implied post-earnings move at about 7%, showing the same basic message from the options market: traders expect a bigger-than-usual reaction. (finance.yahoo.com) Wall Street is looking for about $4.06 to $4.07 in earnings per share on roughly $81.3 billion to $81.4 billion in revenue for the quarter. (finance.yahoo.com) (benzinga.com) The number investors keep circling is Azure. TipRanks said Evercore’s Kirk Materne sees Azure growth of around 38% or better as the threshold for a result that keeps Microsoft’s cloud story on track. (finance.yahoo.com) Microsoft’s last quarter set that benchmark. In fiscal second quarter results released January 28, revenue rose 17% to $81.3 billion and Azure revenue grew 39%, while CNBC reported gross margin narrowed to just over 68%, the lowest in three years. (microsoft.com) (cnbc.com) That margin pressure is tied to the spending race in artificial intelligence. Investors are weighing whether Microsoft’s build-out of data centers and AI infrastructure is turning into enough Azure and Copilot revenue to protect profits. (finance.yahoo.com) (blockonomi.com) The OpenAI relationship added a fresh variable this week. Microsoft said on April 27 that it amended the partnership to add “flexibility” and “predictability,” after years in which the companies’ ties were defined more tightly. (microsoft.com) Microsoft’s stock has also entered the report under pressure. MarketBeat and other market-data sites showed the shares were down about 11% to 12% year to date through April 28, even after a recent rebound. (marketbeat.com) (finance.yahoo.com) Satya Nadella and Amy Hood are scheduled to discuss the results at 5:30 p.m. Eastern. For traders, the question is whether Microsoft delivers numbers strong enough to justify the options market’s $26 swing. (microsoft.com) (barchart.com)