Microsoft Shows 20% Revenue and 61% EPS Growth in Q1
Microsoft joined mega-cap peers with 20% revenue growth and 61% EPS growth in Q1, while 63% of S&P 500 constituents beat EPS estimates with a 25-year low miss rate. AI hyperscaler capex forecasts for 2026 surged to $751 billion, up 83% year-over-year, lifting analyst earnings revisions for infrastructure names.
1. Q1 Earnings Performance
Microsoft delivered 20% revenue growth and 61% earnings growth in the first quarter, contributing to an aggregate S&P 500 EPS rise of 16% excluding one-time items and marking the lowest frequency of EPS misses in 25 years outside the COVID reopening period.
2. Mega-Cap Technology Comparison
Microsoft joined Amazon, Alphabet and Meta in driving collective 20% top-line growth, reflecting heightened investor focus on revenue as a gauge of return on AI investment and positioning it among the standout mega-cap technology performers.
3. AI Capex Outlook
Analyst forecasts for AI hyperscaler capital spending climbed to $751 billion for 2026—$80 billion above early-season estimates and 83% above 2025 levels—boosting expectations for elevated demand in AI infrastructure where Microsoft competes.
4. Analyst Revisions and Risks
Despite strong results, analyst margin estimates have been trimmed across most sectors due to commodity cost pressures, and elevated equity sentiment readings historically signal potential for below-average returns over the next several weeks.