Roughly 92 million Microsoft Corp.(NASDAQ:MSFT) shares are currently sold short – 1.27% of the company’s public float – the highest percentage since May 2015 and the largest jump in short interest among the Magnificent Seven, according to S3 Partners data cited by CNBC.
- MSFT stock is moving ahead of earnings.
S3 also flagged that almost no short covering has occurred heading into the report, meaning bearish traders are staying put rather than trimming positions before Wednesday’s after-the-bell release.
That skepticism arrives despite a strong track record: Microsoft has posted 13 consecutive quarters of revenue beats and 15 straight EPS beats. Wall Street is looking for $87.61 billion in revenue and $4.23 in EPS, up from $76.44 billion and $3.65 a year earlier, according to data from Benzinga Pro.
The stock has struggled regardless, off more than 18% for the year overall and trailing the S&P 500 by roughly 25 percentage points.
Experts Weigh In
Bearish sentiment picked up steam after Alphabet Inc.(NASDAQ:GOOGL)(NASDAQ:GOOG) lifted its 2026 capex outlook and posted faster cloud growth, sending its stock down nearly 8% and pulling Microsoft down 3% on fears of a broader spending arms race.
EvercoreISI’s Mark Mahaney wrote in a note, “Alphabet’s capex boost increases the odds of similar behavior” from Amazon.com Inc. (NASDAQ:AMZN) and Microsoft, according to CNBC.
Microsoft itself set the stage for that worry in April, when it guided to roughly $190 billion in capital expenditures and finance leases for the year – including about $25 billion tied to pricier components as AI chip demand squeezed memory supply.
Not everyone is convinced the AI bet is souring. Citizens’ Patrick Walravens argues CEO Satya Nadella‘s “AI sovereignty” push and steady leadership justify a premium valuation, citing a total addressable market he sizes at $5.1 trillion by 2030. Citizens has the stock as Market Outperform with a $550 target.
Guggenheim Partners’ John DiFucci sees Azure growth of 39% to 40% year-over-year, cushioning softer Windows results. Guggenheim has the stock as Buy with a $586 target.
The tension between that bull case and the market’s record short bet sets up Wednesday’s report from Microsoft as one of the most closely watched of earnings season.