I’m very bullish on Microsoft (MSFT) stock because it’s trading below its 200-week moving average, even as the market is nervous about the software industry’s future. I understand the concern, but given that these fears regarding software are built on the proliferation of artificial intelligence (AI) tools, I’m remaining stoutly confident on the future of MSFT stock because it’s also a leader in AI as well as a software pioneer. That gives me growth and temporary value all in one.
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Microsoft Is Leading AI — the Market Has Forgotten This
The mispricing in MSFT stock has arisen because it still screens as software in the formal industry taxonomy. Therefore, broad software weakness has hit MSFT shares before investors fully process that Azure demand and Copilot monetization are behaving more like an AI platform transition than a mature SaaS slowdown.
Azure grew by 39% in Q2 of Fiscal 2026, and management said demand still exceeds available supply. These aren’t the dynamics of a mature and lagging software company. It looks to me more like a scarce computing platform that happened to have its stock sold off with the software complex.
In such a value setup, MSFT’s price move through the 200-week moving average matters because it arrived while commercial demand, Copilot monetization, and backlog were strengthening. This makes the chart much easier to read as a sentiment reset rather than a proof of broken fundamentals.
Microsoft’s Growth Is Here to Stay
Microsoft’s own revenue recognition shows cloud services are increasingly subscription and consumption-based, so a valuation anchored to legacy software models misses the operating leverage that can emerge as AI workloads and utilization rise.
In the latest quarter, commercial bookings jumped 230%, and commercial remaining performance obligations (RPO) rose to $625 billion, but roughly 45% of that RPO is tied to OpenAI. Therefore, the stock will only re-rate higher aggressively once investors view the backlog as proof of durable platform demand rather than a one-counterparty distortion. That said, given the popularity of OpenAI, I feel confident about its continued success.
Microsoft’s in-house model can be viewed via three linked assets. Firstly, Azure for compute, then M365 and GitHub for distribution, and thirdly, Copilot for monetization. As all these three layers reinforce each other, the current flush in the technical price looks like a resounding buying opportunity to me.
Staying Aware of Risks Is Wise
There are real temporary constraints that have contributed to the recent decline in MSFT stock, too. The gross margin is down slightly, while quarterly capex is at $37.5 billion. However, this is most likely due to capacity catching up with demand, given that management still says supply is short.
The bear case for the investment is that if Azure growth normalizes toward ordinary cloud, Copilot monetization stalls, or AI capex stays ahead of revenue for longer than investors can tolerate, the stock can remain inexpensive-looking without actually re-rating.
That said, Microsoft is unusually well insulated from single-product disappointment because it can monetize the same AI wave across infrastructure, productivity, developer tools, security, and consumer endpoints, lowering the odds that a weak adoption pocket would break the thesis.
Is Microsoft a Buy, Sell, or Hold?
On Wall Street, Microsoft stock has a consensus Strong Buy rating, based on 34 Buys, three Holds, and zero Sells. The average MSFT price target of $582.17 indicates a 56.38% upside over the next 12 months. Even the lowest target of $392 is above the present price of $372, indicating that this is an exceptional entry point for a world-class company that, based on my analysis, isn’t going to be struggling any time soon.
Gabriela Borges, an analyst from Goldman Sachs (GS), a bank I follow closely, has a 61.1% upside Buy target. This aligns with my own perspective: a $600 price could be achieved in 12 months in the bull case, or in 18 months in the base case. I own the stock at 11% of my total portfolio value, which shows aggressive conviction behind my bullish stance.
That said, I also have a strong 35% cash position, which will allow me to buy more Microsoft stock if the price falls even further. This is very unlikely, but my portfolio is nonetheless secured against downside by such cash optionality.
Microsoft Is a World-Class Company and a Cheap Stock
There are only a few companies I feel this confident about at any given time, and Microsoft is right up at the top currently. I’m heavily bullish, primarily because I consider the downturn in its stock price to be a mispricing amid broader software-related sell-off fears. Microsoft is heavily invested in AI, and it has multiple avenues to expand and consolidate its influence in the broader tech industry. As a result of this technical and fundamental value in the stock, and the reality of probable rerating amid strong business results ahead, I’m bullish and sticking to my convictions at this point in the cycle.