Microsoft (MSFT) Stock Forecast & Price Target

Microsoft is poised for significant revenue growth, with estimates suggesting an additional ~$25 billion to its top-line trajectory in FY26 due to strong partner engagement surrounding Copilot deployments. The company's capital expenditures are expected to accelerate in FY26, driven by increasing demand for Azure services and a pivot towards short-lived assets to address immediate capacity constraints, further underscoring the robust market demand. Additionally, Microsoft is experiencing impressive growth rates in commercial bookings and remaining performance obligations, with year-over-year increases of 111% and 51%, respectively, reflecting strong enterprise engagement in AI and cloud services.

The negative outlook on Microsoft's stock is primarily driven by disappointing financial guidance, with Azure growth projected at 37% for Q2, which fell short of investor expectations, leading to a ~3% decline in shares. Additionally, the financial impact from OpenAI resulted in a significant operating income expense of -$3.7B, contributing to a ~10% drag on Q1 earnings per share (EPS), with expectations of continued volatility as the business transitions. Furthermore, ongoing supply chain constraints, particularly regarding essential components like computer chips, alongside evolving cybersecurity threats, pose significant risks to Microsoft's revenue streams and overall financial stability.