Every organization is adopting artificial intelligence (AI) to improve its workforce and business operations, but the technology’s value ultimately depends on secure, efficient, and scalable infrastructure. Microsoft (MSFT) has positioned its AI strategy around these priorities, offering businesses access to advanced AI solutions while investing heavily in the infrastructure required to support them.
A key part of this strategy is Microsoft Foundry, a marketplace that gives customers access to AI models from multiple providers through a single platform. As of July, Foundry had reached 100,000 customers, highlighting the growing demand for Microsoft’s AI ecosystem.
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Meta Platforms (META) has become one of Microsoft's largest customers. The parent company of Instagram and Facebook reportedly processes trillions of tokens each week through Foundry, and spends hundreds of millions of dollars annually on AI models through the Azure cloud platform.
This is notable because Meta has invested heavily in developing its own AI capabilities. Now, its reliance on Azure shows that even tech giants may need external cloud infrastructure to handle increasingly demanding AI workloads.
Meta’s growing Azure usage therefore strengthens Microsoft’s position as a major provider of computing infrastructure. It also demonstrates how Microsoft can continue monetizing AI growth across the broader technology ecosystem.
About Microsoft Stock
Headquartered in Redmond, Washington, Microsoft is a diversified technology company built around cloud computing, enterprise software, productivity, and AI. Commanding a market capitalization of $3.6 trillion, Azure remains Microsoft's core growth engine, while Microsoft 365, Dynamics, LinkedIn, Windows, and gaming provide scale and recurring revenue. Moreover, the company is increasingly positioning AI as the next layer across its existing ecosystem.
MSFT stock has declined nearly 3% over the past 52 weeks, although the shorter-term performance has been considerably stronger. Shares have gained 22% during the last six months. Furthermore, recently released quarterly results have boosted investor confidence, sending MSFT stock up 28% in the last month.
www.barchart.com Microsoft shares trade at 24.6 times forward earnings and 10.8 times sales. While both of these multiples are above industry averages, they remain below Microsoft’s respective five-year averages, indicating a valuation gap that may attract long-term investors.
The tech pioneer has also raised its dividend for 21-straight years and currently distributes an annual dividend of $3.64 per share, producing a yield of 0.75%. The company’s next dividend payment of $0.91 per share is scheduled for Sept. 10 for shareholders on record as of Aug. 20.
Microsoft Surpasses Q4 Earnings
Microsoft disclosed its fourth-quarter fiscal 2026 results on July 29, sending MSFT stock up almost 16% in the following trading session. Revenue grew 18% year-over-year (YOY) to $90.01 billion, beating analyst estimates of $87.62 billion. Adjusted EPS rose 23% YOY to $4.74, exceeding the Street forecast of $4.24.
The Intelligent Cloud segment, which includes Azure, generated $39.3 billion in quarterly revenue, up 32% YOY. Azure’s full‑year fiscal 2026 revenue surpassed $100 billion for the first time, growing about 41% YOY. At that scale, Azure remains behind Amazon's (AMZN) Amazon Web Services (AWS) but ahead of Alphabet's (GOOGL) Google Cloud, placing Microsoft among the largest cloud infrastructure providers.
The Productivity and Business Processes segment — which includes Office, Dynamics, and LinkedIn — earned $37.8 billion in revenue, marking a 14% YOY increase. Microsoft also reported more than 30 million paid seats for Microsoft 365 Copilot.
More Personal Computing remained Microsoft’s weakest segment in the quarter, earning $12.9 billion in revenue, a more than 4% decline. Both Xbox and Windows OEM and Devices fell during the period.
Operating income rose 18% YOY to $40.6 billion, while non-GAAP net income increased 22% YOY to $35.3 billion, underscoring strong profitability. Looking ahead, however, the company will need to fund its enormous capacity requirements while sustaining the earnings growth necessary to support its valuation.
Management expects double‑digit revenue and operating income growth in fiscal 2027, with operating expenses rising in the mid‑ to high‑single‑digit range and full‑year operating margins projected to decline slightly.
On the other hand, analysts expect Q1 fiscal 2027 EPS to grow 13% YOY to $4.67. Full-year fiscal 2027 EPS is currently expected to climb 13% YOY to $19.59, while fiscal 2028 EPS is projected to increase 18% YOY to $23.18.
What Do Analysts Expect for Microsoft Stock?
JPMorgan analyst Samik Chatterjee maintained an "Overweight” rating on MSFT stock with a $625 price target. Meanwhile, Tigress Financial analyst Ivan Feinseth has a “Buy” rating and recently raised his price target from $680 to $690 per share. Both analysts see room for Microsoft stock to appreciate as the company expands its cloud and AI businesses.
Overall, Wall Street has a consensus “Strong Buy” rating for MSFT stock. Among 51 analysts with coverage, 41 have a “Strong Buy” rating, six advise a “Moderate Buy,” and four suggest a “Hold" rating. The average price target of $554.76 represents potential upside of 13% from current levels. Meanwhile, the high price target of $700 implies a possible 43% gain from current levels.
www.barchart.com On the date of publication, Aanchal Sugandh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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