Wells Fargo Cuts Microsoft Price Target to $625 Despite Azure Growth

TLDR

• Wells Fargo lowered Microsoft’s price target to $625 from $650.
• The firm maintained an Overweight rating on Microsoft stock.
• Azure growth is tracking near 41% in constant currency.
• Microsoft 365 Copilot checks showed improving adoption.
• Higher capex and depreciation remain key margin concerns

Microsoft has received fresh price-target cuts from Wall Street analysts days before its fiscal fourth-quarter earnings report, even as several firms kept bullish ratings on the stock. Wells Fargo maintained its Overweight rating, citing strong Azure trends and better Microsoft 365 Copilot checks, but lowered its target to $625.

Wells Fargo Keeps Overweight Rating on Microsoft

Wells Fargo cut its Microsoft price target to $625 from $650 while keeping an overweight rating on the stock. The new target still points to more than 60% upside from the referenced current price of $384.93.

The firm said Microsoft’s fourth-quarter Azure growth is tracking near 41% in constant currency. That would be about one point above the company’s earlier guidance range of 39% to 40%.

$MSFT | Wells Fargo 𝐦𝐚𝐢𝐧𝐭𝐚𝐢𝐧𝐬 𝐎𝐯𝐞𝐫𝐰𝐞𝐢𝐠𝐡𝐭 on 𝐌𝐢𝐜𝐫𝐨𝐬𝐨𝐟𝐭, 𝐜𝐮𝐭𝐬 𝐏𝐓 𝐭𝐨 $𝟔𝟐𝟓

Analyst highlights strong Azure growth and upbeat M365 Copilot checks, while raising outyear capex assumptions, leading to a price target decrease. pic.twitter.com/pddqyrWqkm

— Hardik Shah (@AIStockSavvy) July 15, 2026

Wells Fargo also expects Azure growth to remain near 41% in the first fiscal quarter. The firm said guidance points to “modest” acceleration through the first half of fiscal 2027.

The analyst view remains positive because Azure demand, AI adoption, and cost control could support Microsoft’s outlook. However, higher spending expectations reduced the price target.

Copilot Adoption Improves as Capex Concerns Rise

Wells Fargo said Microsoft 365 Copilot checks were upbeat during the quarter. Partner feedback showed adoption rising, with many partners reporting mid-to-high-single-digit use across their customer seat bases.

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The firm expects Microsoft to report at least 26 million Copilot seats. That estimate is based on more than five million net additions during the latest quarter.

Copilot may not become a near-term earnings driver, but adoption could improve as enterprise AI plans mature. Wells Fargo also noted that Microsoft’s E7 offering may help adoption during late 2026 and 2027.

Capital spending remains a key concern for investors. Wells Fargo raised outyear capex assumptions and now expects spending of about $45 billion per gigawatt during fiscal 2027 and 2028.

The firm also warned that cost per gigawatt may keep rising, especially during the Vera Rubin cycle. Higher depreciation could pressure fiscal 2027 operating margins by about 50 basis points.

Analysts Stay Bullish Before Microsoft Earnings

Microsoft is scheduled to report fiscal fourth-quarter results on July 29. Analyst estimates point to earnings of $4.24 per share and revenue of $86.66 billion.

Citi also lowered its Microsoft price target to $570 from $620, while keeping a Buy rating. The firm expects a strong fourth quarter but warned investors to prepare for higher first-quarter capital spending.

Mizuho also reduced its target, cutting Microsoft to $490 while keeping an Outperform rating. The firm said software demand remains resilient, but AI-related disruption continues weighing on valuation multiples.

Evercore ISI moved in the opposite direction and raised its target to $525 from $510. The firm kept an Outperform rating and turned more positive before Microsoft’s earnings release.