Shares of technology giant Microsoft (MSFT) have fallen to a six-month low as investors hit pause on the artificial intelligence (AI) trade.
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MSFT stock is down 2% on Jan. 14 and trading at $463.41 per share, its lowest level since last summer. Analysts say the stock is in a rut as investors turn more cautious and risk averse after chasing the AI trade over the last few years.
However, analysts largely remain bullish on Microsoft and expect its stock to recover due to increased spending on software and cloud computing during the coming year, according to a new survey from KeyBanc (KEY). The poll found companies that buy information technology (IT) products and bundle them with their own services plan to increase their budgets by 5% in 2026.
The Bull Case for Microsoft
KeyBanc says the survey’s findings are positive for Microsoft, with spending on both its cloud-computing unit Azure and its Copilot AI products expected to rise in coming months. KeyBanc maintains a Buy-equivalent overweight rating and $630 price target on MSFT stock.
Microsoft’s shares have fallen nearly 10% over the past three months, dragged lower by skepticism over software sales and the company’s close association to ChatGPT-developer OpenAI. However, Goldman Sachs (GS) just raised its price target on MSFT stock to $655 and said that investments in its in-house AI models have diversified Microsoft’s exposure away from OpenAI.
Is MSFT Stock a Buy?
Microsoft’s stock has a consensus Strong Buy rating among 34 Wall Street analysts. That rating is based on 32 Buy and two Hold recommendations issued in the last three months. The average price target on MSFT stock of $631.36 implies 36.38% upside from current levels.
