New York, Dec. 26, 2025 (12:39 p.m. ET) — U.S. markets are open and trading in a thin, post-Christmas session, with major indexes hovering near record levels as investors weigh year-end positioning, rate-cut expectations, and whether 2026 becomes a “prove-it” year for AI-driven earnings growth. [1]
Against that backdrop, Microsoft Corp. (NASDAQ: MSFT) is changing hands around $487, modestly lower on the day, with an intraday range roughly $486–$488. Microsoft remains one of the market’s most influential bellwethers, carrying a market capitalization of about $3.85 trillion and trading at roughly 36.7x trailing earnings (based on the latest quoted metrics).
Below is what matters most for investors following Microsoft stock right now: the live market context, the latest Microsoft-specific headlines, the key fundamental debate (AI monetization vs. AI spending), and where major analysts see MSFT heading next.
Microsoft stock price check: where MSFT is trading right now
As of 12:39 p.m. ET in New York, Microsoft shares are around $487 and slightly negative on the session, in a market that has been largely steady during post-holiday, low-volume trading. [2]
For broader context, megacap tech and AI-linked names have been a key support for U.S. equities into year-end, even as investors remain sensitive to valuation and capital spending headlines. Reuters described today’s tape as thin, with indexes near all-time highs and a continued focus on AI-related companies. [3]
ETFs commonly used as real-time proxies for the major averages were slightly lower around midday:
- SPY (S&P 500 ETF): modestly down
- QQQ (Nasdaq-100 ETF): fractionally down
- DIA (Dow ETF): modestly down
The bigger market story today: thin liquidity, “Santa rally” watch, and an AI “prove-it” setup for 2026
Today’s session sits inside a historically watched stretch: the “Santa Claus rally” window (the last five trading days of the year plus the first two of January). Reuters notes investors are watching whether seasonal strength persists into early January. [4]
More importantly for Microsoft and other AI leaders, Reuters quoted Brian Jacobsen, chief economist at Annex Wealth Management, framing 2026 as a potential “prove-it” year where markets will demand tangible productivity and margin gains from AI investment cycles. [5]
That framing matters for MSFT because Microsoft sits at the center of the enterprise AI monetization story—while also spending aggressively to build capacity.
The Microsoft debate investors keep coming back to: AI monetization vs. AI spending
1) Spending is huge—and investors are watching margins and payback
Microsoft’s AI infrastructure buildout has been one of the most talked-about issues on earnings calls and in analyst notes.
Reuters reported that Microsoft’s AI infrastructure spending has been running ahead of some expectations, contributing to investor concerns about how much the AI boom will cost (and how quickly it will translate into profit growth). [6]
In a separate Reuters deep dive on the AI buildout, Microsoft CFO Amy Hood underscored that demand still outpaces supply—summing it up bluntly: “I thought we were going to catch up. We are not.” [7]
2) Microsoft itself is guiding to continued capacity constraints
Microsoft’s own FY26 Q1 earnings materials—and the FY26 Q1 conference call—reinforce that Microsoft sees demand exceeding available capacity, particularly in Azure.
On the FY26 Q1 earnings conference call, Microsoft’s guidance included:
- Q2 revenue outlook of roughly $79.5B to $80.6B
- Azure growth outlook of approximately 37% (constant currency)
- A clear statement that Azure demand remains ahead of capacity, and that Microsoft expects to be capacity constrained through at least the end of its fiscal year [8]
Microsoft also emphasized that capital expenditures are increasing as it accelerates spend on GPUs and CPUs to meet demand. [9]
The most important recent MSFT headlines investors are pricing in
Here are the Microsoft-specific developments currently shaping sentiment and forecasts:
Microsoft 365 pricing power: global increases starting July 2026
Reuters reported Microsoft will increase prices for Microsoft 365 productivity suites globally starting July 2026, with the sharpest increases hitting some small business and frontline worker plans (with enterprise plans seeing smaller increases). [10]
Microsoft’s own Microsoft 365 blog framed the change as part of a broader roadmap of new security and AI capabilities (including Copilot Chat and security agents), and included third-party commentary highlighting the significance of AI and security improvements. [11]
Why it matters for MSFT stock: Investors generally view pricing power as a key offset to higher AI infrastructure costs—especially if Microsoft can keep renewal rates strong.
New AI investment commitments: $23B headline figure
Reuters reported Microsoft unveiled $23 billion in new AI investments, including:
- $17.5B earmarked for India starting in 2026 (described as Microsoft’s largest investment in Asia)
- More than C$7.5B (~$5.42B) planned for Canada over the next two years, including new cloud capacity and AI partnerships [12]
Why it matters: This supports the bull case that Microsoft intends to outbuild competitors where demand is accelerating—but it also reinforces the near-term spending burden.
AI adoption friction: quotas, pilots, and enterprise integration
A Reuters report (citing The Information) said Microsoft lowered certain internal sales growth targets/quotas for some AI products, while Microsoft disputed key characterizations of that report. Reuters also cited real-world enterprise integration challenges and pointed to research suggesting many AI projects don’t move beyond pilot stages. [13]
Importantly, Reuters quoted Gil Luria (D.A. Davidson) suggesting that slower-than-hyped adoption does not eliminate AI’s promise—but may make implementation harder than many expected. [14]
Why it matters: This is the heart of the MSFT narrative risk: not whether AI is important, but whether the pace of monetization can keep up with the pace of investment.
Microsoft fundamentals: what the company last reported (and what it guided)
Microsoft’s FY26 Q1 investor release highlighted:
- Microsoft Cloud revenue of $49.1B, up 26%
- Azure and other cloud services growth of 40%
- Intelligent Cloud segment revenue of $30.9B, up 28%
- $10.7B returned to shareholders via dividends and repurchases in the quarter [15]
Microsoft’s FY26 Q1 performance summary also emphasized that cloud margins have been pressured by AI scaling:
- Microsoft Cloud gross margin percentage decreased to 68%, driven by AI infrastructure scaling and higher usage of AI features (partly offset by efficiency gains). [16]
Investor takeaway: Microsoft is still posting strong growth in cloud and Azure, but investors are watching whether AI-related costs compress margins for longer than expected—and how quickly pricing, usage, and attach rates (e.g., Copilot) can compensate.
Wall Street forecasts for MSFT: price targets, consensus, and the bull case
Across mainstream sell-side coverage, sentiment on Microsoft remains broadly constructive.
A widely cited consensus snapshot compiled by StockAnalysis shows:
- Consensus rating: “Strong Buy”
- Average price target: about $628
- Range: roughly $500 to $700 (low to high target) [17]
Recent notable examples in that same dataset include:
- Wedbush’s Dan Ives reiterating a target around $625 [18]
- D.A. Davidson’s Gil Luria maintaining a target around $650 [19]
Barron’s also highlighted Ives’ bullish view that Microsoft is positioned as an AI front-runner into 2026, pointing to AI-driven Azure momentum and enterprise demand signals. [20]
What bulls emphasize:
- Azure as a durable enterprise cloud platform with AI services accelerating growth
- Microsoft 365 and Copilot as distribution advantages: Microsoft can embed AI into workflows enterprises already pay for
- Pricing power and bundling potential to support monetization even as capex rises [21]
Key risks investors should keep on the radar
Even for long-term bulls, several issues can move MSFT quickly—especially in a low-liquidity tape like today’s.
AI spending and financing concerns (macro + valuation sensitivity)
Reuters has documented rising investor jitters about the scale of AI capex across Big Tech and the growing use of bond markets to finance infrastructure—an environment that can pressure valuations if investors decide the payoff timeline is stretching out. [22]
Regulatory and legal overhangs tied to market power and bundling
Microsoft remains exposed to regulatory scrutiny in multiple regions:
- Reuters reported Microsoft avoided a potential EU antitrust fine by agreeing to pricing changes and interoperability commitments related to Office/Teams bundling, with commitments expected to apply globally. [23]
- Reuters also reported a consumer antitrust class action alleging Microsoft’s OpenAI partnership harmed competition and inflated prices (Microsoft disputed the allegations). [24]
- The U.S. FTC has also studied AI partnerships and investments more broadly, reflecting sustained regulatory attention on this category. [25]
Adoption friction: AI pilots vs. scaled deployments
The AI software story can be volatile quarter to quarter—especially if enterprises slow down deployment timelines, or if Copilot/AI attach rates fail to match the infrastructure ramp. Reuters’ reporting on quota narratives and enterprise integration challenges reflects this risk. [26]
Is the stock market open now? Yes—here’s what to know into the close (and for the next session)
As of 12:39 p.m. ET, the market is open.
And this isn’t a shortened day: Reuters reported that major U.S. exchanges stuck to their planned calendar, with early close on Dec. 24 but a regular full day of trading on Dec. 26. [27]
You can also confirm holiday hours on the NYSE’s official hours and calendar page. [28]
What investors should watch into today’s close:
- Volume and volatility: Low liquidity can exaggerate moves in megacaps—especially into year-end positioning. [29]
- AI “risk-on” tone: Microsoft often trades as part of the AI complex; broad sentiment can matter as much as company-specific headlines. [30]
- Rates narrative: Any shift in rate expectations tends to move long-duration, high-multiple stocks like MSFT. Reuters notes the market has been supported by expectations of easing and resilient data. [31]
If you’re reading this after the closing bell: focus on after-hours headlines tied to AI infrastructure, enterprise demand, and regulatory actions—because those have been the recurring catalysts behind sharp MSFT swings in recent months. [32]
Bottom line for MSFT investors right now
Microsoft stock is trading near $487 in a market that is calm but headline-sensitive, with investors trying to balance two truths:
- Microsoft is executing strongly in cloud and enterprise AI (with Azure growth and broad product distribution advantages). [33]
- The AI arms race is expensive, margin-impacting, and increasingly a “show me” story—where markets want proof that capex converts into sustainable profit expansion. [34]
For the next major catalyst, investors will be watching Microsoft’s next earnings window (many market calendars point to early February 2026, though Microsoft’s own investor FAQ lists upcoming quarters as TBA until officially announced). [35]
References
1. www.reuters.com, 2. www.reuters.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.reuters.com, 6. www.reuters.com, 7. www.reuters.com, 8. www.microsoft.com, 9. www.microsoft.com, 10. www.reuters.com, 11. www.microsoft.com, 12. www.reuters.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.microsoft.com, 16. www.microsoft.com, 17. stockanalysis.com, 18. stockanalysis.com, 19. stockanalysis.com, 20. www.barrons.com, 21. www.microsoft.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.ftc.gov, 26. www.reuters.com, 27. www.reuters.com, 28. www.nyse.com, 29. www.reuters.com, 30. www.reuters.com, 31. www.reuters.com, 32. www.reuters.com, 33. www.microsoft.com, 34. www.reuters.com, 35. www.microsoft.com
