TLDR
- Microsoft traded up 1.4% to $401.10 on Thursday, briefly touching $405.99 intraday.
- Morgan Stanley analyst Josh Baer kept a Buy rating and $650 price target, calling Microsoft’s AI lead “clear.”
- 62% of CIOs plan to increase Azure spending over the next 12 months, up from 57% last year.
- Class-action lawsuits allege Microsoft misled investors on Copilot and AI adoption.
- Earnings are due July 29, with Copilot adoption and AI monetization in focus.
Microsoft (MSFT) stock climbed 1.4% on Thursday, trading at $401.10 after briefly hitting $405.99 intraday. The stock had closed the prior session at $395.63, and volume came in just slightly below its daily average of around 37.5 million shares.
The move comes two weeks out from Microsoft’s fiscal fourth-quarter earnings on July 29, and investors are paying attention.
Morgan Stanley analyst Josh Baer kept his Buy rating on MSFT ahead of that print, with a $650 price target. He cited a recent CIO survey showing that Microsoft’s AI momentum is stronger than the market is giving it credit for. The stock currently trades at around 16 times fiscal 2028 earnings, which Baer sees as undervalued given Azure’s growth trajectory.
The CIO survey data is hard to ignore. About 62% of respondents plan to increase Azure spending in the next 12 months, up from 57% a year ago. Microsoft 365 demand is also growing — 65% of CIOs plan to spend more on it, compared to 55% last year and just 46% two years ago.
On top of that, Microsoft’s premium software tiers are gaining traction. Half of CIOs surveyed expect to use the E5 package next year, and 21% plan to move to the pricier E7 level. That kind of upsell is good news for per-user revenue.
Overall, CIOs expect Microsoft spending to grow 7.6% over the coming year — the highest rate among all vendors in the survey.
Azure and Copilot Take Center Stage
Microsoft also announced a partnership with 3M to advance AI data-center infrastructure and enterprise transformation, adding another data point to the Azure ecosystem story.
Copilot adoption will be the number to watch on July 29. Analysts want to see how quickly interest from CIOs is converting into actual revenue. The last earnings print gave investors some encouragement — Microsoft reported $4.27 EPS for the quarter ended April 29, beating estimates of $4.06, on revenue of $82.89 billion, up 18.3% year over year.
The average analyst price target sits at $559.63, implying roughly 38% upside from current levels. Of 42 analysts tracked, 41 have a Buy rating and seven have a Hold. The consensus is a “Moderate Buy.”
Headwinds Remain
It’s not all clear skies. Some Wall Street firms have trimmed their price targets ahead of earnings, citing concerns over rising AI infrastructure spending and the pressure that could put on margins.
Legal headwinds are also building. Multiple class-action notices have been filed alleging Microsoft misled investors about Copilot and AI adoption rates, with a lead plaintiff deadline of August 11, 2026.
Microsoft’s Xbox division continues to be a drag on sentiment. After an $80 billion bet on gaming, the unit is undergoing a major restructuring, with layoffs and a reset in strategy.
CEO Judson Althoff sold 15,500 shares on June 1 at $460.99 per share, totaling roughly $7.1 million. EVP Takeshi Numoto sold 4,500 shares at $402.84 on June 10.
Citigroup upgraded MSFT from “market outperform” to “overweight” on Thursday. Wells Fargo maintained its “overweight” rating but cut its price target from $650 to $625.
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