Shares of Microsoft (NASDAQ:MSFT) gained 2.64% over the past trading sessions, increasing the tech giant’s one-month gain to 7.41%. So far in 2025, the stock is up 18.21%, including nearly 40% since its year-to-date low on April 8. On June 12, it was reported that Microsoft is developing a version of its AI Copilot for the Pentagon, which should be available at some point this summer.
On June 5, it was reported that the company will be expanding its AI and cloud investments in Switzerland, committing $400 million to expand its data center infrastructure in the European nation. The additional capacity is expected to support more than 50,000 current customers and expand the availability of AI services for more sectors, including health care, finance government. Microsoft is capitalizing on its Azure platform’s momentum as revenue jumped 33% in FY25 Q3, driven by AI services.
When the company last reported earnings, it announced that total revenue
However, its decision earlier in May fire 6,000 employees, or 3% of its workforce, signals the tech giant is serious about cost discipline amid economic uncertainty. With analysts eyeing sustained cloud demand, 24/7 Wall St. conducted analysis to explore whether Microsoft can maintain its upward trajectory and drive long-term growth.
Key Points in This Article:
- Microsoft is dedicating significant capex to AI and cloud infrastructure in order to compete with other tech firms.
- Microsoft’s gaming segment grew 44% last year, providing significant revenue to complement its software, cloud and AI business lines.
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Why Invest in Microsoft
Microsoft navigates challenges, but remains a prime investment due to its AI and cloud dominance. Third-quarter earnings showcased robust demand for its Intelligent Cloud segment, though tariff risks linger. Microsoft’s $80 billion cash reserve fuels its $80 billion investments in cloud and AI infrastructure, with over half in the U.S.
Its Microsoft 365 Copilot, adopted by over 70% of Fortune 500 firms, drives productivity revenue, positioning Microsoft to capture the AI market’s 37% compounded annual growth predicted through 2030. Similarly, partnerships with Oracle (NYSE:ORCL) for multi-cloud solutions bolster its competitiveness against Amazon‘s (NASDAQ:AMZN) AWS.
When Microsoft last reported earnings, EPS beat by 7.40% and revenue beat by 2.37%. The EPS beat marked the 15th time in the past 16 quarters that the company surpassed estimates, with EPS coming in at $3.46 versus the consensus forecast of $3.20.
Microsoft (MSFT) As a Company
Microsoft reported a gross profit of $49.8 billion, up 14% year-over-year, with gross margins at 68%, driven by strong cloud and AI demand. The company committed to continuing spending on capital expenditures, focusing on AI data center expansion to meet enterprise needs. Analysts expect Q4 capex to remain elevated at $16 billion to $17 billion to support Microsoft’s cloud infrastructure growth.
Tariff uncertainties do pose risks, even with the pause on China, as supply chain cost pressures for server hardware are not eliminated. Microsoft’s operating income of $32 billion was tempered by a 5% rise in operating expenses, reflecting heavy AI R&D investments. Despite no revenue from its $13 billion OpenAI stake, Microsoft reported $42.4 billion in Microsoft Cloud revenue, up 20% year-over-year.
Beyond cloud, Microsoft’s gaming segment grew 44% with 43 points of the gain coming from its acquisition of Activision, but bolstered by Xbox content and Bethesda’s Starfield expansion. A partnership with Oracle for multicloud solutions strengthens its enterprise offerings, further diversifying its revenue. Wall Street projects Q4 revenue of $73.8 billion, up 14%, driven by Microsoft’s AI and cloud momentum.
Microsoft As a Stock
Earlier in June, Citi raised its price target for MSFT to $605 from $540 while maintaining its “Buy” rating. The firm also added an “upside 90-day catalyst watch” on the shares. Citi says Microsoft remains its top pick in software given the company’s “relative defensiveness in a choppy macro environment,” AI product cycle and “reinforced conviction” that Street estimates on Azure may be too low for fiscal 2026. The firm believes the share catalyst will be fiscal Q4 earnings when fiscal 2026 guidance is announced and beyond as both Microsoft and OpenAI AI revenue continue to ramp. Citi says Azure has “hit an inflection” based on its exit rate math and token usage.
In late June, Wedbush raised its price target on Microsoft to $600 from $515, maintaining its “Outperform” rating. The firm is “incrementally bullish” on Microsoft following recent AI customer checks in the field. Wedbush says a “massive adoption wave of Copilot and Azure monetization now on the doorstep” for the company. Similarly, Morgan Stanley recently raised its price target on Microsoft to $530 from $482, maintaining its “Overweight” rating on the shares after the firm updated its capex-implied AI revenue analysis and its OpenAI model detailing the contribution to Azure.
Broadly, Wall Street analysts’ remain bullish, with 30 of 35 analysts covering MSFT assigning it a “Buy” rating, five assigning it a “Hold” rating and zero assigning it a “Sell” rating. Overall, the stock receives a consensus “Strong Buy” rating. Wall Street’s price targets cover a significant range, spanning $475 per share on the low end to $605 per share on the high end. The median one-year price target for MSFT is $519.76, which represents 5.06% potential upside from today’s share price.
Institutional ownership currently stands at 73.06%, with three of the four largest buy-side firms — Vanguard, BlackRock and State Street — holding a collective 1.570 billion shares of Microsoft.
|
Estimate |
Price Target |
%Change From Current Price
|
|
Low |
$475 |
-3.98% |
|
Median |
$518.77 |
5.06% |
|
High |
$605 |
22.29% |
Microsoft (MSFT) Stock Prediction in 2025
Microsoft’s 33% Azure growth and 20% cloud revenue increase in Q3 position it for AI market gains. However, $20 billion quarterly capex and tariff risks require caution. Its $80 billion cash reserve and Oracle partnership offer stability, making MSFT stock a buy for growth investors, even as valuation concerns linger.
24/7 Wall St.’s 12-month price target for Microsoft is $495.00, implying 0.05% potential upside from the stock’s current price. This cautious target reflects Azure’s strength and Q4 revenue guidance of $73.7 billion, balanced against the need for higher capex spending and potential supply chain disruptions, positioning it at a realistic estimate of its leading presence in the space.
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