TLDR
- Mizuho’s Jordan Klein named Microsoft his top software long into year-end, citing Azure’s potential to surpass 50% growth
- Microsoft posted Q2 EPS of $4.74, beating estimates by $0.50, with revenue of $90.01 billion
- Analysts hold a consensus “Moderate Buy” with an average price target of $559.16
- Hilltop Holdings cut its MSFT stake by 66.4%, while major institutions including Norges Bank and Nuveen added large new positions
- CEO Judson Althoff sold 10,000 MSFT shares on August 5th at an average price of $487.89
Microsoft (MSFT) stock opened at $506.06 on Tuesday, sitting well below its 52-week high of $553.72 but above its low of $349.20. The stock’s year-to-date lag within the Magnificent 7 is actually part of what’s drawing fresh attention from analysts.
Mizuho TMT specialist Jordan Klein has made Microsoft his top software pick heading into year-end. His case rests on a few key pillars: Azure could break above 50% growth as new capacity comes online, FY27 guidance concerns have cleared, and the company remains committed to staying free-cash-flow positive.
Klein called that cash flow commitment a “big deal.”
He also sees upside from Microsoft’s OpenAI relationship. As he put it, if OpenAI does anything well, Microsoft benefits. If Microsoft finds a better AI path internally, it benefits even more. It’s a heads-I-win, tails-I-also-win setup in his view.
Klein’s broader software read is less rosy though. He argues the recent sector rally is more mechanical than fundamental, driven by passive rotation and quant buying rather than active conviction.
Azure and Earnings Back the Bull Case
Microsoft’s most recent quarterly results gave the bulls something to work with. The company reported earnings per share of $4.74, beating the $4.24 consensus estimate by $0.50. Revenue came in at $90.01 billion, ahead of the $87.62 billion estimate.
Revenue was up 17.7% year over year. The company posted a net margin of 40.31% and a return on equity of 31.98%. Analysts now forecast full-year EPS of $19.58.
A quarterly dividend of $0.91 per share was also declared, payable September 10th, with an ex-dividend date of August 20th. That puts the annualized yield at around 0.7%.
Analyst Targets and Institutional Moves
Price targets from Wall Street range widely. Wolfe Research holds an outperform rating with a $550 target. Guggenheim reiterated a buy with a $586 target. Bernstein raised its target to $660, while Argus sits lower at $510. The consensus average across 42 buy ratings and 5 hold ratings lands at $559.16.
On the institutional side, the picture is mixed. Hilltop Holdings cut its stake by 66.4% in Q1, reducing its position to 42,330 units valued at roughly $15.7 million. But bigger names went the other direction. Norges Bank initiated a new position worth over $50 billion. Nuveen added a new stake worth approximately $18.7 billion. UBS Asset Management grew its position by 500%.
Institutional investors now own roughly 71.13% of the stock.
On the insider front, CEO Judson Althoff sold 10,000 units on August 5th at $487.89 each, totaling just under $4.88 million. That represents a 9.05% reduction in his holdings.
Klein flagged that crowded software names like CrowdStrike, Cloudflare, and Datadog show no signs of investor capitulation, leaving less room for upside. Microsoft’s relative underperformance, by contrast, gives it more room to move.
Bernstein’s latest note argued Microsoft is not overbuilding data center capacity, and that infrastructure would remain useful for Azure even if AI demand pulled back.
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