Microsoft stock price target raised to $700 from $675 at Wells Fargo

Investing.com - Wells Fargo raised its price target on Microsoft (NASDAQ:MSFT) to $700 from $675 on Thursday, maintaining an Overweight rating on the tech giant’s stock. Microsoft is currently trading at $541.55, just 2.5% below its 52-week high of $555.45, with InvestingPro data indicating the stock may be overvalued based on its Fair Value assessment.

The firm cited Microsoft’s Azure cloud service performance, which delivered a 2-percentage point beat with 39% constant currency growth in the most recent quarter, driven by upside in core services while AI components performed in line with expectations. This impressive growth contributes to Microsoft’s overall revenue growth of 14.93% over the last twelve months, with total revenue reaching $281.72 billion.

Wells Fargo expressed increased confidence in the sustainability of Azure’s growth trajectory, noting strong bookings numbers and now models growth to remain relatively stable through fiscal year 2026, exiting at 35% compared to its previous estimate of 34%.

Microsoft’s second-quarter guidance projects 37% constant currency growth for Azure, matching the first-quarter guidance, with the company indicating demand significantly outpaces supply and constraints expected to persist through the fiscal year end.

Capital expenditure is set to increase substantially, with management guiding for a quarter-over-quarter increase in the second quarter and fiscal year 2026 capex growth exceeding the already high 58% year-over-year growth in fiscal year 2025, prompting Wells Fargo to boost its capex estimate by approximately 15% to $145 billion.

In other recent news, Microsoft reported its first fiscal quarter of 2026 earnings, surpassing market expectations. The company achieved an earnings per share of $4.13, exceeding the forecast of $3.66, and reported revenue of $77.7 billion, which also surpassed the anticipated $75.32 billion. This performance was driven by strong growth in Microsoft’s cloud and AI businesses. Analysts from Stifel, Raymond James, and BMO Capital have adjusted their price targets for Microsoft, citing varying views on Azure’s growth and capacity needs. Stifel lowered its price target to $640, maintaining a Buy rating, while Raymond James reduced its target to $600, citing increased capital expenditure expectations. BMO Capital also lowered its target to $625, maintaining an Outperform rating, noting Azure’s 39% growth. Truist Securities, however, maintained a Buy rating with a price target of $675, highlighting impressive performance across all segments and a significant increase in commercial bookings. These developments reflect differing analyst perspectives on Microsoft’s growth trajectory and strategic investments.

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