Microsoft Stock Slumps, But Wall Street Sees Big Upside

Microsoft ( (MSFT) ) has been popular among investors this week. Here is a recap of the key news on this stock.

Microsoft shares have come under pressure, dropping about 8.5% over the past week and 11% over the past month, even though the stock remains modestly positive over the last year. The selloff followed December-quarter results that beat Wall Street’s revenue and earnings forecasts but fell short of lofty expectations for even faster growth in Azure, the core of Microsoft’s Intelligent Cloud unit. Management also issued softer margin guidance as the company ramps up spending to ease AI‑related capacity constraints, after pouring $88.2 billion into capital investments last year and signaling another big step‑up in fiscal 2026. That push is crucial to unlock more cloud and AI revenue, as demand is rising faster than Microsoft can currently serve.

Despite the pullback and some investor disappointment, analysts remain firmly bullish on Microsoft. The stock carries a Strong Buy consensus from Wall Street, with recent targets from major firms like Wells Fargo and Citi still implying roughly 28%–32% upside, even after modest cuts. CMB International’s Saiyi He reiterated a Buy rating with a $614.60 target, above the Street’s already‑lofty $603.27 average, citing a 20.9% jump in operating income and robust growth in both Intelligent Cloud and the Productivity and Business Processes segment. Microsoft 365 and Copilot are seeing strong adoption, helping expand operating margins to 47.1% despite heavy AI investment. Away from the cloud, Microsoft is moving to rebuild trust in Windows by prioritizing reliability over nonstop feature rollouts, and its Xbox hardware future looks increasingly tied to the broader PC ecosystem as developers overwhelmingly favor Windows PC over consoles. For investors, the current weakness is being framed by analysts as a reset in expectations rather than a broken story, with AI, cloud and productivity software still driving a compelling long‑term growth case for Microsoft stock.