Should You Buy Microsoft Stock Before Earnings?

Microsoft (NASDAQ: MSFT) is set to announce its second-quarter fiscal 2026 earnings on Jan. 28. All eyes are on the tech giant as AI enthusiasm, cloud demand, and peak earnings season culminate next week. Let's dive in as to why investors should consider buying Microsoft before Wednesday.

Microsoft's growth led by Azure

First, Microsoft is experiencing significant growth across its businesses, led primarily by Azure. Where many companies are still in a "hype" phase with AI and cloud computing, Microsoft is generating real, significant revenue. The company also boasts substantial free cash flow, healthy margins, and a balance sheet that few can match.

Image source: Getty Images.

Last quarter, Microsoft saw an 18% increase in revenue across all businesses. Gross margin on the $77.7 billion of revenue was an impressive 69%.

Still, Microsoft's stock has been relatively flat over the past 12 months, up just 1% as of Jan. 22. The stock is arguably somewhat expensive, trading with a forward price-to-earnings (P/E) ratio of around 28. Year-to-date, the stock is down over 6%.

Buy Microsoft for the long haul

If you're going to buy the stock, it really looks like much of the optimism surrounding Microsoft's cloud computing, AI strategy, and overall growth potential has already been baked in. The tech behemoth does pay a solid $0.91 quarterly dividend.

I wouldn't buy Microsoft based only on what happens during its earnings call next week. However, investors should absolutely invest in Microsoft for what it offers over the long term. The company is elite and part of the Magnificent 7. If you're looking for exponential stock price appreciation, you may be disappointed. If you're on the hunt for a solid growth and income mix with a fundamentally excellent company, Microsoft is a premier choice for long-term investors.

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.