Street Reassesses Microsoft (MSFT) Amid Azure Growth and Capex Concerns

Microsoft Corporation (NASDAQ:MSFT) is among the best instrumentality learning stocks to bargain according to analysts. On February 5, Bloomberg reported that Stifel downgraded Microsoft’s standing from Buy to Hold and chopped the terms people by astir 27%, to $392 from $540. With this, Stifel has joined the 5%-6% of analysts who clasp a cautious view, retired of 64 covering the banal (per CNN.com data).

In his note, Stifel expert Brad Reback argued that statement expectations for 2027 “are excessively optimistic,” amid concerns implicit the maturation of its unreality business. Reback believes that due to the fact that of “the well-documented Azure proviso issues, coupled with Google’s beardown GCP/Gemini results,” and “growing Anthropic momentum,” Microsoft’s Azure concern is improbable to witnesser accelerated growth.

Additionally, the expert believes that the assertive spending to grow its artificial quality capabilities is “likely to beryllium a headwind” to operating-margin leverage. On the prospects for the stock, the expert told investors:

We spot nary near-term catalysts and expect the banal to beryllium range-bound until either capex maturation slows beneath Azure maturation and/or Azure posts a important acceleration.

Roman Pyshchyk/Shutterstock.c.om

The institution reported Q2 FY26 results successful precocious January, which showed a slowdown successful unreality income maturation and elevated superior expenditures. These 2 person been caller concerns for investors, who proceed to question the imaginable payoff from specified important spending.

The banal has corrected by astir 14% since it reported results, done February 10. Apart from Stifel, astir different analysts reiterated their ratings connected the stock, with Philip Securities adjacent upgrading it to a Buy, arsenic they judge the correction presents a bully introduction opportunity. As of February 10, the banal commands a statement 1-year median terms people upside of astir 45%.

Microsoft Corporation (NASDAQ:MSFT) is simply a planetary exertion institution that develops and sells a wide scope of software, unreality services, devices, and concern solutions, serving some idiosyncratic users and endeavor customers worldwide. Its flagship products see Windows, Microsoft 365, Azure, LinkedIn, and Xbox.

While we admit the imaginable of MSFT arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you’re looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.

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Disclosure: None. This nonfiction is primitively published astatine Insider Monkey.