- Morgan Stanley labeled Microsoft “overweight” and kept a $650 price target, implying about 38% upside.
- Analysts expect software spending growth to rise 9 basis points year‑over‑year, from 3.7% in 2025 to 3.8% in 2026.
- CIOs project 7.3% growth for Microsoft in 2026, a core reason for the bullish view.
- Microsoft plans a new data center on a 237‑acre site in Lowell Township, Michigan; energy‑cost concerns later pressured the stock.
- Other Wall Street firms, including Wedbush and Evercore ISI, also raised forecasts while noting limited systemic AI risks.
This past week, Morgan Stanley initiated a bullish stance on Microsoft, calling the stock “overweight” and maintaining a $650 price target based on favorable software spending plans and recent AI investments. The firm pointed to a small uptick in software spending growth for 2026 and stronger CIO demand as reasons for the call.
Analysts expect software spending growth to rise by 9 basis points year‑over‑year, from 3.7% in 2025 to 3.8% in 2026. Microsoft stands to benefit from that environment, with CIOs anticipating 7.3% growth for the company in 2026.
Shares have fallen about 4% since January 1, but Morgan Stanley sees the decline as temporary given the projected upside to the $650 target. The stock currently trades near the middle of its 52‑week range and below its 200‑day simple moving average.
The company’s AI push also figures into analyst views. Microsoft announced plans to build a new facility on a 237‑acre site in Lowell Township, Michigan, a move that initially lifted the stock. The gain was later pared after investors raised concerns about the data center’s energy costs.
Other Wall Street analysts have adjusted forecasts upward for 2026. Wedbush analyst Dan Ives called Microsoft a “core winner”, suggesting Azure deployments could expand as CIO budgets shift. Evercore ISI analyst Julian Emanuel added a cautionary note but said systemic risks tied to the AI trade remain limited given healthy hyperscaler balance sheets and muted cross‑holdings.
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