Microsoft (MSFT) Stock Forecast & Price Target

Microsoft's outlook remains positive due to strong demand for its Azure platform, which is expected to contribute an estimated additional ~$25 billion to the company's revenue trajectory by FY26. The acceleration in capital expenditures alongside increasing commercial contracted revenue obligations (RPO) and commercial bookings—growing by 51% and 111% year-over-year, respectively—supports the narrative of robust operational momentum. Furthermore, Microsoft's strategic partnership with OpenAI is expected to enhance investor confidence while also continuing to position the company ahead of its competitors in the cloud services market.

The negative outlook on Microsoft's stock is primarily driven by a weaker-than-expected revenue forecast, specifically a 37% constant currency growth rate for Azure, which fell short of investor expectations and contributed to a stock sell-off. Additionally, significant expenses tied to OpenAI, totaling approximately $4.1 billion, have adversely impacted earnings per share, suggesting underlying volatility in financial performance. Finally, the high capital and operating costs associated with Microsoft's cloud infrastructure, along with intense competition in the technology sector, raise concerns about the company's ability to achieve sustainable growth and profitability.