Microsoft trades near $497 as Azure and AI support bullish outlook

Traders Union
All News
Stocks
Microsoft trades near $497 as Azure and AI support bullish outlook

Azure and AI remain key growth drivers

Following the earnings report, the MSFT investment case is increasingly shifting from expectations around AI to the question of how efficiently the company can monetize the infrastructure it has already built. Microsoft said Azure annual revenue exceeded $100 billion for the first time, while Microsoft 365 Copilot reached more than 30 million paid seats. At the same time, capital expenditures in the quarter rose to around $41 billion as the company continues to expand data centers, purchase GPUs, and develop its own AI chips.

This week, sentiment received additional support from reports that Microsoft plans to significantly increase production of next-generation Maia accelerators. This potentially reduces dependence on third-party suppliers and, over time, could improve the economics of AI workloads, although the high level of investment remains the main risk for free cash flow and margins.

Wall Street outlook remains constructive

Forecasts after the earnings report remain positive overall. The market expects Azure to maintain strong momentum, while new higher targets have appeared on Wall Street: Bernstein this week raised its MSFT target to $660, arguing that Microsoft’s current AI infrastructure is being built more disciplinedly than investors had feared. At the current price of around $497, the shares trade at roughly 29.6 times earnings, so further gains require continued strong Azure growth and evidence that Copilot and other AI products can offset the accelerated increase in capital expenditures.

The macroeconomic backdrop is currently working in favor of Microsoft and other major technology companies. The U.S. PPI released on August 13 was unchanged in July, while annual producer inflation slowed to 4.7%; at the same time, initial jobless claims rose to 209,000 from a revised 200,000. These data reduced concerns about another Fed rate hike and support long-duration assets such as MSFT.

MSFT keeps upside potential above $490

The ability to hold above the $490 level indicates bullish strength and continued potential for a break above resistance around $512 and a rise toward $520-530; a loss of support would lead to a decline toward $480-470, but this pullback could be used for buying. The long-term outlook. as written in Microsoft shares recover as Azure growth offsets rising AI investment costs, remains constructive, and there is currently no threat to the upward trend.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.