Microsoft price target lowered to $640 from $650 at Stifel

Stifel analyst Brad Reback lowered the firm’s price target on Microsoft (MSFT) to $640 from $650 and keeps a Buy rating on the shares. While stating that Microsoft posted a “solid” fiscal Q1 print, the firm notes that the stock traded off by about 4% in after-hours, which it blames on persistent Azure capacity shortages causing Q2 Azure guidance of 37% constant currency growth to be toward the bottom of buyside targets. While management is moving aggressively to address this situation, raising FY26 capex growth expectations to greater than 60% with spend skewed toward compute, this accelerated spending comes with a somewhat near-term gross margin headwind, the analyst tells investors. The firm now models capex of $148B, up 68% year-over-year, up from its previous estimate of $120B, or 36% growth.