Microsoft’s $625 Billion Backlog Faces an OpenAI Reality Check as Burry Piles In

Michael Burry, the investor who famously shorted the US housing market before the 2008 financial crisis, has placed a fresh bet on Microsoft just days before the software giant’s third-quarter earnings release. The move, disclosed via Substack on April 23, injects a dose of contrarian optimism into a stock that still trades roughly 23 percent below its July 2025 record high.

Burry’s entry point was triggered by a sector-wide rout in software stocks after disappointing forecasts from IBM and ServiceNow. He described Microsoft as “bombed-out” — excessively punished by the market — and held his software positions rather than dumping them. Alongside Microsoft, he expanded stakes in MSCI, PayPal, and Adobe, all established names with structural competitive advantages trading well off their recent peaks.

The timing is no coincidence. On April 29, after US markets close, Microsoft will report results for the third fiscal quarter of 2026. The consensus among 49 analysts covering the stock is for adjusted earnings of $4.04 per share, representing growth of nearly 17 percent year-over-year. Microsoft has beaten expectations in each of the past four quarters.

The Azure Threshold and the OpenAI Overhang

All eyes are on Azure, Microsoft’s cloud computing arm. Management has guided for constant-currency growth of up to 38 percent. But analysts at Morgan Stanley see the bar set higher — 39 percent is the magic number. Hitting that level would signal that Microsoft can meet surging demand despite tight server capacity. Currently, supply constraints are the bottleneck, not customer appetite.

The broader picture is dominated by a staggering $625 billion contracted backlog — a massive cushion of future revenue. Yet nearly half of that sum, $281 billion, comes from a single client: OpenAI, the ChatGPT developer. In February, the startup slashed its long-term spending plans for computing power, cutting its projected outlay through 2030 from $1.4 trillion to roughly half that. Microsoft must clarify on Tuesday whether its own backlog will shrink as a result.

Burry, true to form, left his position size undisclosed. But notably, he simultaneously expanded his hedges: put options now account for roughly five percent of his portfolio, targeting the Nasdaq ETF QQQ, Nvidia, and a semiconductor ETF. He is betting on select individual stocks while hedging against the broader market.

Should investors sell immediately? Or is it worth buying Microsoft?

Chart Resistance and Analyst Conviction

The stock closed Friday at €359.45, up nearly 12 percent over the past month but still down about 11 percent year-to-date. Technically, the situation remains tense. The share price sits below its 200-day moving average of roughly €403, a level that now serves as formidable resistance. A break above that would require a catalyst — and the earnings report could provide it.

Despite the chart challenges, analyst sentiment remains overwhelmingly bullish. Of the 49 analysts covering Microsoft, 41 rate it a strong buy, four a moderate buy, and only four recommend holding. TD Cowen maintains a “Buy” rating with a $540 price target, implying nearly 30 percent upside. The bank argues that generative AI adoption among corporate clients is entering a “critical second phase,” moving from experiments to full-scale deployments. It raised its growth forecast for Office 365 cloud revenue to 15 percent annually through the end of the decade.

Morgan Stanley has reaffirmed its $650 price target. The market’s focus, however, is on whether Microsoft can demonstrate that its massive $37.5 billion quarterly investment in AI infrastructure is translating into measurable returns.

What’s at Stake

Microsoft investors will receive a quarterly dividend of $0.91 in June. But the near-term narrative hinges on two questions: Can Azure growth clear the 39 percent threshold, and will management address the OpenAI backlog exposure convincingly?

If the answers are positive, the stock could test the €403 resistance level. A disappointment on Azure growth, by contrast, risks sending shares back toward the year’s lows. Burry has already placed his wager — now the market waits to see if it pays off.