Microsoft (MSFT) Stock Forecast & Price Target

Microsoft's positive stock outlook is supported by strong demand for its Azure cloud services, which is expected to continue accelerating due to capacity constraints rather than reduced demand. The company's capital expenditures are projected to increase in FY26 as it pivots toward investments in short-lived assets to address immediate infrastructure needs. Additionally, both commercial revenue performance obligations and commercial bookings demonstrated significant growth of 51% and 111% year-over-year, respectively, indicating robust business momentum across its segments.

The outlook for Microsoft's stock remains negative due to several fundamental concerns. Forecasted Azure growth of 37% fell short of investor expectations and is compounded by significant volatility in the company's OIE line, leading to substantial losses that negatively impacted earnings per share (EPS) and overall profitability. Furthermore, the substantial costs associated with cloud infrastructure and ongoing operational expenses, alongside increasing regulatory pressures and heightened competition, raise concerns about Microsoft's ability to sustain growth and profitability in the face of these challenges.