Microsoft (MSFT) stock is down about 20% so far in 2026, sitting around $386.74. That pullback has pushed the forward P/E to 20.25x — well below the sector average of 24.61x. But the underlying business keeps growing, and Wall Street is paying attention.
Jefferies has a Buy rating on MSFT with a $675 price target. The firm highlighted Microsoft as a standout name in the current cloud spending boom, pointing to Azure’s accelerating market share gains as a key reason to stay bullish.
Global cloud infrastructure spending reached $129 billion in Q1 2026, up 35% year-over-year. Big tech capital expenditure plans for 2026 have been revised up from roughly $600 billion to about $750 billion — a 67% jump — with 2027 projections already approaching $1 trillion.
Azure is a direct beneficiary. In Microsoft’s fiscal Q3 2026, Azure revenue grew 40% year-over-year, topping analyst estimates. Azure now controls about 21% of the global cloud infrastructure market, putting it second behind AWS. Microsoft says demand is currently outpacing its own supply capacity.
Q3 FY2026 results were strong across the board. Total revenue rose 18% to $82.9 billion. Operating income climbed 20% to $38.4 billion, and net income jumped 23% to $31.8 billion — $4.27 per share.
Microsoft Cloud revenue came in at $54.5 billion, up 29%. Commercial remaining performance obligations nearly doubled, rising 99% to $627 billion — a sign of heavy future demand already locked in.
Intelligent Cloud revenue grew 30% to $34.7 billion. Productivity and Business Processes added 17% to $35.0 billion. More Personal Computing dipped 1% to $13.2 billion.
Citizens reiterated a Market Outperform rating and $550 price target on July 7. The firm cited CEO Satya Nadella’s AI sovereignty strategy and expects revenue growth to accelerate to 17% in FY2026 from 15% in FY2025. Operating margin is projected to expand from 46% to 47%.
Benchmark’s Yi Fu Lee initiated coverage in April 2026 with a Buy, calling Microsoft a “central player in AI” with a data advantage its rivals can’t easily replicate — pointing to 1 billion Windows users, 300 million Office seats, LinkedIn, GitHub, and Azure’s enterprise footprint.
Wedbush’s Dan Ives holds an Outperform rating and a $575 target, saying Wall Street keeps underestimating Azure’s growth trajectory.
Of 50 analysts tracked, the consensus is Strong Buy. The average price target of $552.27 implies roughly 43% upside from current levels.
Microsoft signed a 20-year power deal with Chevron’s Energy Forge One unit to build Project Kilby in West Texas — a facility expected to deliver about 2.67 gigawatts for Microsoft data centers.
The company is also working with Mayo Clinic to build an AI model for healthcare using de-identified clinical data, focused on earlier diagnosis and tailored treatment.
Microsoft reports next on July 29. Analysts expect Q4 FY2026 EPS of $4.21, up from $3.65 a year ago — 15.3% growth. Full-year FY2026 consensus sits at $16.76 per share, up from $13.64 in FY2025.
Italy’s antitrust authority has opened an investigation into Microsoft over alleged unfair practices related to Microsoft 365 price increases tied to Copilot and Designer integration.
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