Microsoft price target revisions highlight split views on AI spending and Azure growth

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Microsoft AI & Azure outlook

Highlights

Cantor Fitzgerald raised Microsoft’s price target to $608 from $522 with an overweight rating, projecting 23% upside amid accelerating Azure momentum.
Microsoft’s Azure revenue grew 43% in fiscal Q4 2026, beating the 39%-40% outlook, with guidance for roughly 44.5% growth in fiscal Q1 2027.
Rothschild & Co. Redburn raised its target to $440 but kept a neutral rating, citing $330 billion in uncommenced lease commitments as a risk to investment flexibility.

Broker revisions follow strong cloud momentum

As reported by CNBC, Microsoft received higher price targets from Cantor Fitzgerald and Rothschild & Co. Redburn after the company’s latest quarterly performance underscored accelerating growth in Azure and resilience in its broader cloud business.

Cantor Fitzgerald raised its target to $608 from $522 and kept its overweight rating, implying roughly 23% upside from Friday’s close near $494. The firm said Microsoft’s growth is accelerating as capacity deployment improves and hardware and software efficiencies support the business, even as Azure remains capacity constrained.

In Microsoft’s fiscal 2026 fourth quarter, Azure revenue growth reached 43%, above the 39% to 40% outlook management had given on the prior quarter’s earnings call. Cantor also points to guidance for roughly 44.5% Azure growth at the midpoint for fiscal first quarter 2027, saying the acceleration is notable because Microsoft did not raise its capital expenditure outlook.

AI investment economics remain a concern

Rothschild & Co. Redburn also increased its Microsoft target, to $440 from $400, but maintained a neutral rating. That new target remains about 10% below Friday’s closing price, signaling caution despite the firm’s more constructive view on Azure growth and Microsoft’s capex discipline.

The more cautious stance centers on the economics of the AI infrastructure buildout and on obligations not fully reflected on hyperscalers’ balance sheets. Redburn argues that long-term contracts, leases and other commitments materially increase underlying expenses, and it says Microsoft appears the most exposed, citing about $330 billion of uncommenced lease commitments.

The firm says those obligations could limit hyperscalers’ flexibility to support the next phase of investment as financing risks increase. It remains more cautious on Microsoft and Amazon, while also flagging Alphabet and Oracle as companies where underlying leverage may be higher than reported.

Our earlier report on the U.S. data center electricity shortfall highlighted how surging AI chip output is outpacing power supply growth, creating a widening gap that could constrain sector expansion. We noted estimates that the deficit could reach the equivalent of multiple major cities’ baseload demand and potentially grow further by 2029, underscoring the scale of grid and generation investment needed to support continued AI computing growth.

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