TLDR
- MSFT fell over 2% intraday, but analysts still project significant long-term upside.
- Morgan Stanley reaffirmed Microsoft as a top software pick with a $650 target.
- Azure AI margins are already positive and expected to rise sharply by FY29.
- Strong cloud demand continues to support Microsoft’s durable revenue growth outlook.
- Short-term stock weakness contrasts with sustained confidence in Microsoft’s AI strategy.
Microsoft Corporation (MSFT) traded at $473.73 as of 12:28 PM EST, down $9.89 or 2.04% for the day.
Microsoft Corporation, MSFT
The decline began sharply just after 10:00 AM and continued to pressure the stock throughout the morning. The price has since stabilized but remains well below the day’s opening level.
This movement came despite continued strong analyst support for Microsoft, especially around its AI and cloud computing business. Recent commentary from Morgan Stanley highlighted Microsoft as a top software pick with long-term growth prospects. Microsoft’s performance in AI-driven infrastructure and efficiency continues to drive optimism among analysts.
The stock pullback appears linked to early market reactions, but fundamentals remain intact. Morgan Stanley has maintained a $650 price target, representing substantial upside from current levels. The firm continues to project margin expansion and long-term revenue growth, particularly in Microsoft’s Azure business.
Morgan Stanley Maintains Bullish Outlook on Microsoft’s AI
Morgan Stanley reaffirmed its Buy rating on Microsoft, emphasizing durable growth and efficiency gains in cloud and AI services. Analyst Keith Weiss cited meetings with executives that supported their confidence in Microsoft’s strong top-line momentum. The bank reiterated Microsoft as its top large-cap software pick.
Weiss expects Microsoft’s Azure AI gross margins to improve significantly in the coming years. Estimates suggest margins could rise from 20% today to over 40% by fiscal year 2029. This potential margin growth aligns with Microsoft’s efforts to optimize operations while expanding its AI footprint.
Morgan Stanley introduced a Capex-Implied approach to model Azure’s long-term performance. This method reflects Microsoft’s internal signals, including faster customer bookings and accelerating product adoption. Together, these factors strengthen the bank’s outlook on Microsoft’s scalable AI monetization model.
Strong Financial Structure Backs Microsoft’s Long-Term AI Play
Microsoft continues to benefit from robust demand across software, cloud, and enterprise solutions worldwide. The company’s diversified revenue streams support long-term investments in high-growth areas like AI and cybersecurity. This foundation allows it to absorb short-term volatility while focusing on sustainable innovation.
Microsoft has managed to grow margins alongside investments in AI infrastructure and cloud capabilities. The Azure platform remains a key driver, with early signs of profitability in AI services already emerging. Microsoft’s financial discipline supports its ambition to lead in next-generation technology platforms.
Microsoft’s long-term outlook remains strong due to its scale, innovation, and strategic clarity. As macroeconomic factors shift, Microsoft’s balanced approach to growth and efficiency continues to attract institutional backing. The reaffirmed price target by Morgan Stanley reflects this confidence amid broader market movements.
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