BofA Frames Microsoft Q3 Earnings as Key AI Execution Test Amid YTD Slump

Bank of America positions Microsoft's fiscal Q3 2026 earnings on April 29 as a pivotal AI litmus test, with today's coverage emphasizing Azure growth reacceleration via new capacity after 37.5% YoY constant-currency gains last quarter (down from 38%). Analysts model capex easing to $26.9B (up 61% YoY from prior $29.9B) and highlight Copilot's ~15M paid seats (3.5% of Microsoft 365 base) as upside. Shares lag with 13% YTD drop versus Nasdaq's 4% rise; BofA's Buy and $500 target hinge on surprises in cloud momentum and adoption.