Microsoft MSFT stock rose about 3% on Wednesday as Wall Street analysts reaffirmed their bullish outlook on the software giant despite trimming some price targets ahead of the company’s fiscal fourth-quarter earnings report later this month.
Shares gained after Evercore ISI raised its price target on Microsoft to $525 from $510 while maintaining an Outperform rating.
The brokerage expects Microsoft to deliver double-digit revenue and operating income growth in fiscal 2027, supported by continued investment in artificial intelligence and improving momentum across its cloud business.
The firm said Microsoft shares have remained range-bound as investors wait for greater clarity on Azure cloud revenue acceleration and the monetization of Microsoft Copilot.
Evercore ISI expects Azure growth to strengthen in the second half of the year while Copilot adoption continues to improve.
The brokerage also forecasts fiscal 2027 cash capital expenditures of about $210 billion, above the Street estimate of roughly $180 billion.
According to Evercore ISI, capital expenditure growth could begin to normalize in 2027 after the current investment cycle while providing a catalyst for improving investor sentiment.
Analysts remain optimistic despite price target cuts
While Evercore ISI became more optimistic, several other brokerages reduced their price targets ahead of Microsoft’s earnings release without changing their positive recommendations.
Citi Research lowered its target price to $570 from $620 but maintained a Buy rating.
The revised target still represents substantial upside from Microsoft’s recent trading levels.
“We remain positive on MSFT,” Citi analyst Tyler Radke wrote Wednesday, adding that the company is “increasingly strategically positioned in an era of optimizing token spend and AI efficiency.”
The brokerage expects Microsoft to report a strong fiscal fourth quarter but said investors should prepare for higher artificial intelligence spending in fiscal 2027.
“We think MSFT will be able to demonstrate stronger returns with accelerating growth rates in flagship franchises (Azure + M365 CoPilot) as we move into FY27, which would ultimately drive accelerating overall revenue/EPS growth through FY30,” Radke wrote.
Wells Fargo also maintained a constructive stance despite highlighting mixed expectations for the fourth quarter.
The firm pointed to concerns surrounding Microsoft’s cloud market share and capital spending but said stronger Azure growth, AI adoption and operating expense discipline could support a stronger fiscal 2027 outlook.
Mizuho also lowered its price target, cutting it to $490 from $550 as part of a broader revision across software stocks.
However, the brokerage said its channel checks remained positive overall, with public cloud demand staying strong and AI adoption remaining robust.
AI investment and earnings remain key focus
Microsoft’s continued investment in artificial intelligence remains a central theme for investors ahead of earnings.
Evercore ISI said Azure acceleration, Copilot momentum and moderating capital expenditure growth could help improve sentiment during the second half of calendar 2026.
The company is scheduled to report fiscal fourth-quarter earnings on July 29.
Consensus estimates compiled by Fiscal AI project earnings of $4.24 per share on revenue of $86.66 billion.
Analyst sentiment remains overwhelmingly positive ahead of the results.
According to Koyfin data, 53 of the 56 analysts covering Microsoft rate the stock as a Buy or stronger recommendation, while the remaining analysts maintain Hold ratings.
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