Microsoft Corp. (NASDAQ: MSFT) heads into Friday’s post‑Christmas session with investors balancing two big forces: strong AI- and cloud-driven demand signals versus rising scrutiny on AI returns, regulation, and execution.
U.S. markets were closed Thursday, Dec. 25, for Christmas and the prior session on Wednesday, Dec. 24, was an early close (1:00 p.m. ET)—meaning Thursday night headlines and thin holiday liquidity can have an outsized influence on Friday’s open. [1]
Below is what to know before the opening bell.
Where Microsoft stock stands heading into Friday’s session
Microsoft shares last traded on Wednesday, Dec. 24, finishing at $488.02. [2]
A few quick context points from commonly followed market dashboards:
- 52-week range: roughly $344.79 to $555.45, leaving the stock about 12% below the 52‑week high. [3]
- 2025 performance: up about +15% year-to-date (YTD), even after a late‑year pullback from October highs. [4]
- Valuation snapshot: trailing P/E sits in the mid‑30s based on widely cited trailing EPS. [5]
Why the calendar matters: Nasdaq’s U.S. holiday schedule lists Dec. 24 as an early close and Dec. 25 as closed, and the market reopens normally on Friday, Dec. 26. [6]
The biggest Microsoft headlines investors are pricing right now
1) Microsoft is accelerating AI infrastructure investment—especially in India and Canada
One of the most market-relevant stories this month is Microsoft’s commitment to large AI and cloud infrastructure spending.
Reuters reported Microsoft unveiled $23 billion in new AI investments, including plans to spend $17.5 billion in India over four years starting in 2026, alongside more than C$7.5 billion (about $5.42 billion) in Canada over the next two years (with new cloud capacity expected to come online in the second half of 2026). [7]
What it means for MSFT stock:
- Bulls tend to read this as demand confidence—Microsoft is building into a pipeline of enterprise and public‑sector AI workloads.
- Skeptics see capex pressure and ask how quickly monetization (especially for Copilot and other AI services) will scale to match spend.
2) Microsoft is raising Microsoft 365 prices in 2026—an important, measurable catalyst for revenue per seat
Microsoft said it will increase global prices for Microsoft 365 commercial and government suites starting in July 2026, framing it as a reflection of expanded functionality and feature delivery. [8]
Reuters detailed that some of the largest increases land on small business and frontline worker plans, while enterprise tiers see smaller hikes. [9]
Why this matters now (even though it starts mid‑2026):
- Price changes are a clear, auditable lever for Microsoft’s recurring revenue story.
- But price increases can also become a competitive flashpoint vs. Google and other productivity alternatives—especially for cost-sensitive customers. [10]
3) Copilot keeps shipping new features—but there are still questions about AI sales execution
Microsoft has continued to push steady product updates in Microsoft 365 Copilot. A Microsoft 365 Copilot update post highlighted multiple feature enhancements across late 2025—covering items like Copilot Chat improvements, Teams changes, and Excel/PowerPoint capabilities. [11]
Microsoft’s official release notes also show ongoing Copilot feature rollouts (including expanded app capabilities and new experiences in the Copilot app). [12]
At the same time, investors have been watching signs of sales execution friction in AI software. Reuters reported that Microsoft shares dipped earlier this month after a report said the company cut AI software sales quotas following missed targets for the fiscal year that ended in June, though Reuters also noted Microsoft denied the report in a subsequent CNBC item. [13]
Takeaway: The market is still trying to answer a core question:
Is AI monetization for Microsoft mostly a near-term add-on story (Copilot attach rates, new SKUs), or a medium-term platform story (Azure AI consumption, broader seat expansion and workflow redesign)?
4) Microsoft–OpenAI partnership: a refreshed framework with high strategic value (and high scrutiny)
Microsoft and OpenAI announced a “next chapter” of their partnership, describing a new definitive agreement meant to strengthen the long-term relationship and support continued innovation. [14]
Microsoft’s own blog post around the partnership also included specific details related to OpenAI’s corporate structure changes and Microsoft’s stake on an as‑converted basis following recapitalization. [15]
Why investors care:
- Strategically, the partnership supports Microsoft’s differentiation in enterprise AI—particularly through Azure’s position as a deployment and infrastructure layer.
- It also keeps Microsoft tied to a fast-moving AI ecosystem that regulators are increasingly evaluating (more on that below).
5) Regulatory and antitrust pressure remains a real headline risk—especially in cloud
Europe (DMA cloud probes):
In November, Reuters reported the European Commission launched three market investigations related to cloud services by Amazon and Microsoft under the Digital Markets Act (DMA). Two probes assess whether AWS and Microsoft Azure should be designated as “gatekeepers,” and a third looks at whether existing DMA rules effectively address cloud market practices. [16]
The European Commission’s own DMA page describes these investigations similarly and notes the third probe will examine issues including interoperability obstacles, data access, and tying/bundling. [17]
Google drops EU complaint, but the issue doesn’t disappear:
Reuters also reported that Google dropped its EU antitrust complaint about Microsoft’s cloud practices shortly after the EU opened its broader cloud inquiry. [18]
U.S. FTC scrutiny:
Separately, Reuters reported earlier in 2025 that the FTC advanced a broad antitrust probe of Microsoft, including software licensing and cloud computing. [19]
Investor implication: Regulatory outcomes can influence:
- cloud contracting and licensing practices,
- bundling strategies (especially with productivity + security + AI),
- and long-term margin structure.
6) Government and public-sector AI collaboration is expanding
Reuters reported the U.S. Department of Energy signed agreements with 24 organizations—including Microsoft—to support the DOE’s Genesis Mission, aimed at using AI to accelerate research and strengthen U.S. energy and security capabilities. [20]
While not a revenue “needle mover” on its own, it reinforces Microsoft’s positioning as a trusted enterprise/government partner in large-scale AI deployments.
Analyst forecasts and price targets: what the Street expects for MSFT
On the bullish side, Investopedia reported that Wedbush analyst Dan Ives reiterated an “outperform” view with a $625 price target, arguing investors may still be underestimating Azure’s AI-driven upside into 2026. The same piece cited Visible Alpha data showing an average price target around $635 among tracked analysts. [21]
A separate forecast compilation from StockAnalysis lists a consensus view of “Strong Buy” with an average price target of $628.03, with targets ranging from $500 (low) to $700 (high). [22]
How to read these targets before Friday’s open:
- Price targets can shape sentiment, but they’re often most influential when paired with a catalyst (earnings, guidance, major product/partnership news, or a macro shock).
- The dispersion (low to high) matters: it reflects uncertainty around how fast AI revenue scales versus how long capex remains elevated.
A market signal investors are watching: short interest ticked higher
Short interest is not extreme for Microsoft, but it has risen recently.
MarketBeat reported that as of Dec. 15, 2025, Microsoft had 66.68 million shares sold short (about 0.90% of float), up 7.63% from the prior report, with a days-to-cover ratio around 2.8. [23]
What that can mean into a thin holiday session:
- Not necessarily bearish by itself, but it can add fuel to sharper moves if news surprises either direction.
What could move MSFT on Dec. 26 specifically?
Because it’s a holiday‑adjacent session, price action can be driven more by positioning than by company-specific headlines. Still, here are the most realistic drivers for Friday:
- Any incremental AI infrastructure/capex headlines (data centers, energy sourcing, geographic expansion), because Microsoft is one of the main “AI infrastructure” bellwethers. [24]
- Macro sentiment toward mega-cap tech—rates, risk appetite, and whether the market leans into (or fades) “Santa Claus rally” seasonality. MarketWatch noted Dec. 26 has historically been a consistently positive day for the S&P 500 in past open sessions, though seasonality is not a strategy on its own. [25]
- Regulatory headlines (EU cloud DMA probes, U.S. antitrust angles) that can hit mega-cap multiples quickly. [26]
- Productivity + AI monetization chatter—especially anything that clarifies Copilot demand, attach rates, or enterprise rollouts. [27]
The key risks investors should keep in view
AI ROI risk and “capex duration”
The industry is still debating how quickly AI demand translates into durable profit expansion versus a longer period of heavy buildout. The Financial Times described a sharp rise in AI-related infrastructure spending expectations heading into 2026, while also flagging the risk of overbuilding and valuation pressure if returns lag. [28]
Competition in cloud + productivity
Azure remains a top global cloud platform, but cloud market share battles—and price/performance competition—can reshape growth narratives quickly. [29]
Regulation and antitrust
DMA market investigations and U.S. FTC scrutiny are exactly the kinds of storylines that can weigh on sentiment even in the absence of immediate penalties. [30]
Security and trust
Microsoft remains central to enterprise identity and productivity workflows, making security and account integrity a persistent area of attention for customers and regulators alike (and therefore for investors). [31]
Bottom line before the bell
Going into the Friday, Dec. 26 open, Microsoft stock is in a familiar spot for mega-cap tech in the AI era:
- Fundamentals and narrative support: Azure + AI infrastructure leadership, major global investment commitments, continuous Copilot product iteration, and analysts largely maintaining bullish long-term targets. [32]
- The main debate: whether the market will reward Microsoft’s AI buildout now—or demand clearer evidence of near-term monetization and margin durability, particularly as capex stays high and regulators lean in. [33]
With the holiday-thinned setup (early close on Dec. 24 and the Christmas closure on Dec. 25), expect liquidity effects to matter more than usual—meaning moves can look bigger than the underlying news flow might justify. [34]
This article is for informational purposes only and is not investment advice.
References
1. www.nasdaq.com, 2. finviz.com, 3. finviz.com, 4. finviz.com, 5. finviz.com, 6. www.nasdaq.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.reuters.com, 11. techcommunity.microsoft.com, 12. learn.microsoft.com, 13. www.reuters.com, 14. openai.com, 15. blogs.microsoft.com, 16. www.reuters.com, 17. digital-markets-act.ec.europa.eu, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.investopedia.com, 22. stockanalysis.com, 23. www.marketbeat.com, 24. www.reuters.com, 25. www.marketwatch.com, 26. www.reuters.com, 27. techcommunity.microsoft.com, 28. www.ft.com, 29. www.reuters.com, 30. digital-markets-act.ec.europa.eu, 31. www.techradar.com, 32. www.reuters.com, 33. www.reuters.com, 34. www.nasdaq.com
