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Microsoft beat revenue estimates by $2.3B with Azure growing 40% year-over-year.
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56 of 57 analysts rate the stock a buy with a consensus target of $625.41.
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Reaching $650 requires a 35.7% gain and would value shares at 41x forward earnings.
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Microsoft (NASDAQ: MSFT) has delivered solid returns in 2025, but shares remain below their 52-week high of $553.50. The stock currently trades around $479.
Despite the pullback, fundamentals remain robust. Microsoft reported revenue of $77.67 billion in its most recent quarter, beating estimates by nearly $2.3 billion and marking 18.4% year-over-year growth. Azure grew 40% as enterprises accelerate digital transformation.
CEO Satya Nadella continues positioning Microsoft at the center of the AI revolution, with Copilot AI assistants embedded across its productivity suite. With momentum building around AI monetization and cloud growth, investors are wondering how high shares could climb in 2026.
Analysts are decidedly bullish. The consensus 12-month price target sits at $625.41, implying 30.5% upside from current levels. That optimism reflects strong conviction: 56 of 57 analysts covering the stock rate it a buy or strong buy, with just one hold rating and zero sells.
This near-unanimous support stems from Microsoft’s impressive growth trajectory. Wall Street expects revenue growth to continue in the high teens, driven by Azure’s expansion and increasing AI adoption across enterprise customers. Earnings per share estimates have been climbing, with analysts forecasting continued double-digit earnings growth as Microsoft scales its AI infrastructure investments. The company has beaten earnings expectations in 11 of the past 12 quarters, suggesting actual results will likely exceed forecasts.
At today’s price of $479, Microsoft trades at roughly 30x forward earnings. At $650, shares would trade at approximately 41x forward earnings. That represents a premium valuation, but it’s not entirely unreasonable for a company growing earnings at 12.7% annually while maintaining a 48.9% operating margin and 35.7% profit margin.
The S&P 500 trades around 22x forward earnings, meaning Microsoft would command nearly double the market multiple. However, Microsoft’s combination of scale, profitability, and growth justifies a premium. The company generated $293.81 billion in trailing revenue while posting a 32.2% return on equity.
This infographic analyzes Microsoft’s potential to reach a $650 stock price target by 2026, supported by strong growth estimates and key AI and cloud catalysts, while also outlining associated risks.
What could push Microsoft to $650? Several catalysts stand out.
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First, AI monetization is accelerating. Copilot tools are being integrated across Office 365, Dynamics 365, and GitHub, creating new revenue streams.
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Second, Azure continues taking cloud market share, with 40% growth significantly outpacing overall cloud market expansion.
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Third, institutional investors are adding positions. Adage Capital recently made Microsoft its second-largest holding with over 6.8 million shares, demonstrating sophisticated investor conviction.
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Fourth, Microsoft is expanding data center capacity aggressively. The company recently acquired 316 acres in Michigan for $45.3 million and is rezoning additional property for new facilities, positioning it to meet surging AI compute demand. It’s massive ‘Fairwater’ data center campus is expected to exceed 2 gigawatts, making it one of the largest projects in the world.
Reaching $650 would require a 35.7% gain from current levels. While ambitious, Microsoft has achieved returns of this magnitude multiple times historically. The stock delivered 57% returns in 2023 and has posted annual gains exceeding 35% in numerous years since 2000.
With Microsoft now a $3.56 trillion company, repeating triple-digit returns is less likely, but 35% gains remain within reach given the company’s growth profile and market position. At the end of the day, the market’s sentiment on AI will likely shape Microsoft’s gains next year. Right now, media mentions of ‘AI bubble’ are at an all time high.
Yet, if Microsoft were to accelerate Azure even higher (some third party estimates have predicted Azure growth could hit nearly 50% by the end of 2026), Micorosft could surpass a $5 trillion valuation and hit $650 per share.
Hitting $650 per share would require Microsoft to gain 35.7% in 2026. Wall Street is already forecasting 30.5% upside, and the company’s consistent earnings beats suggest actual results will exceed expectations. If AI adoption continues accelerating, Azure maintains its growth trajectory, and the broader market cooperates, $650 is achievable.
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
