U.S. markets reopen on Friday, December 26, 2025, after Christmas Day (Dec. 25) closure and the Christmas Eve early close (Dec. 24 at 1:00 p.m. ET). [1] That holiday timing matters: liquidity can be thinner, price gaps can be larger than usual, and headlines can move mega-cap tech quickly.
Heading into the Dec. 26 session, Microsoft (NASDAQ: MSFT) sits at the center of two competing narratives investors have been debating into year-end: (1) undeniable AI-and-cloud demand and (2) the cost and pace of monetizing it.
Below is a practical, news-driven briefing on the biggest Microsoft developments, what Wall Street is forecasting, and the near-term catalysts to watch before the bell.
MSFT stock snapshot heading into the Dec. 26 open
Microsoft last traded around $488 in the post–early-close environment (last reported trade on Dec. 24, with a market cap near $3.85T and trailing P/E around 36.7x, per market data).
A few context points investors are citing most often:
- Microsoft is below its late-October peak (multiple market summaries place the 52-week high around the mid-$550s) and remains a bellwether for “AI winners” even after a pullback. [2]
- The post-Christmas session itself has a strong seasonal reputation (not a guarantee), with some strategists noting Dec. 26 has historically skewed positive for the S&P 500 when markets are open. [3]
The biggest Microsoft news to know before Friday’s session
1) AI infrastructure is still the core story — and Microsoft is spending aggressively
Microsoft’s most recent earnings outlook underscored a simple point: demand is running ahead of capacity, and Microsoft is building.
From Microsoft’s FY2026 Q1 earnings call (reported Oct. 29, 2025):
- Microsoft Cloud revenue: “surpassed $49 billion,” up 26% year-over-year. [4]
- Commercial RPO: increased over 50% to nearly $400 billion. [5]
- Capital expenditures: about $34.9 billion in the quarter, driven by cloud/AI demand. [6]
- Azure Q2 (FY26) growth outlook: about 37% in constant currency, with Microsoft expecting to remain capacity constrained through at least the end of its fiscal year. [7]
Reuters has also highlighted that Microsoft’s AI infrastructure spending has been outpacing some Wall Street expectations, fueling investor debates about near-term margin pressure versus long-term AI payoff. [8]
Why this matters before the open: If markets rotate toward “profitability now” over “build for tomorrow,” high-capex leaders can wobble—even when revenue is strong. Conversely, if the tape rewards AI infrastructure scale, Microsoft tends to trade like a “core holding” for the theme.
2) Microsoft is trying to widen Copilot adoption — but monetization scrutiny hasn’t vanished
Two December product/pricing moves matter for investors tracking AI revenue per user:
- Microsoft announced general availability of Microsoft 365 Copilot Business for SMBs at $21 per user/month, aiming to broaden adoption beyond large enterprises. [9]
- Microsoft also published a Microsoft 365 pricing and capabilities update (Dec. 4, 2025) emphasizing new Copilot features (including more “agentic” workflows) and enterprise controls. [10]
At the same time, a key December headline reminded investors that “AI is inevitable” doesn’t mean “AI is instantly easy to sell”:
- Reuters reported that The Information said Microsoft had lowered sales growth targets/quotas for some newer AI products after teams missed targets, reflecting customer resistance to paying more for certain AI offerings. Microsoft disputed aspects of the reporting, and the stock’s reaction showed how sensitive sentiment is to any hint of slower AI monetization. [11]
Why this matters before the open: On Dec. 26, Microsoft could trade less on broad “AI optimism” and more on whether investors believe Copilot and AI agents are moving from pilots to scaled deployments—fast enough to justify the cost curve.
3) Global AI expansion: India and Canada investment pledges are huge—read them as multi-year signals
Microsoft’s December geographic expansion headlines were substantial:
- India: Reuters reported Microsoft plans to invest $17.5 billion in India. [12]
- Canada: Reuters reported Microsoft will invest more than C$7.5 billion (~$5.4B USD) in Canada over the next two years as part of a broader C$19 billion plan between 2023 and 2027; Microsoft’s own blog framed this as a landmark AI/digital infrastructure commitment. [13]
How investors typically interpret this: These are not “next quarter” revenue drivers. They’re capacity-and-ecosystem bets that support Azure consumption, sovereign cloud positioning, and long-duration enterprise workloads.
4) Regulation remains a background risk—but one EU cloud/Teams overhang eased
Regulation rarely moves MSFT day-to-day, but it can shape valuation narratives for mega-cap tech.
- In Europe, Microsoft settled the EU’s Teams bundling probe by agreeing to unbundle Teams from Office suites and improve interoperability/migration options—commitments the European Commission accepted and can enforce for years. [14]
Separately, Reuters reported France’s antitrust authority dismissed a complaint against Microsoft by Qwant, which Microsoft welcomed. [15]
Why this matters before the open: It’s not likely to drive Dec. 26 trading alone, but it can reduce “regulatory discount” pressure at the margin—especially when tech multiples are already under debate.
Forecasts and analyst calls: what Wall Street is expecting now
Analyst price targets cluster around the low-to-mid $600s
Across widely followed analyst-aggregation trackers:
- StockAnalysis shows a “Strong Buy” consensus and an average price target around $628 (with a broad low/high range). [16]
- Benzinga lists a consensus price target around the mid-$620s, with recent analyst notes in December. [17]
Recent commentary in major financial media has also highlighted bullish calls:
- Wedbush reiterated an Outperform view with a $625 target, framing Microsoft as a “core” AI winner into 2026. [18]
- Investopedia, citing Visible Alpha, noted an average price target around $635 among tracked analysts in its recent write-up. [19]
- MarketWatch highlighted D.A. Davidson’s argument that Microsoft’s OpenAI relationship can function as a strategic “safety net,” alongside a $650 price target in that commentary. [20]
Important reality check: Price targets are typically 12-month views, not “what happens tomorrow.” Around holidays, short-term price action often diverges from analyst models.
Microsoft’s own near-term forecast: Q2 guidance sets the baseline
For investors, the most “actionable” forecast is still the company’s guidance. From Microsoft’s FY26 Q1 call:
- Q2 revenue guidance:$79.5B to $80.6B (about 14%–16% growth). [21]
- Intelligent Cloud guidance:$32.25B to $32.55B (about 26%–27% growth). [22]
- Azure growth (constant currency): approximately 37%, with demand “significantly ahead” of available capacity. [23]
Translation for Dec. 26: Unless there’s breaking news, MSFT tends to trade around whether investors trust this trajectory—and whether the market is rewarding growth + spend, or punishing spend regardless of growth.
Positioning and sentiment signals investors are watching
Short interest: still low as a % of float, but rising
Microsoft is not a “short squeeze” stock, but short interest is one way to track skepticism:
- MarketBeat data shows MSFT short interest around 66.7M shares (as of a mid-December settlement date), up from the prior period. [24]
- Finviz shows short float under 1%, reinforcing that bearish positioning is still relatively modest in percentage terms. [25]
The takeaway isn’t “shorts are in control”—it’s that some hedging/negative positioning has increased during the AI monetization debate.
Options market tone: implied volatility looks relatively muted
Several options analytics trackers show MSFT implied volatility in the high-teens/around ~19% recently—generally not signaling panic-level fear heading into the post-holiday session. [26]
Key upcoming catalysts (and the dates that matter)
Next earnings date: still not officially confirmed
Microsoft’s Investor Relations materials typically list future earnings dates as TBA until formally announced. [27]
Third-party trackers estimate Microsoft’s next report in late January or early February 2026, but they don’t all agree:
What to do with this: Treat the date as “late Jan/early Feb” until Microsoft confirms.
Dividend: next key date is the February 2026 ex-dividend
Microsoft’s Investor Relations dividend page lists the current quarterly dividend rate and history. [30]
A widely circulated dividend announcement notes:
- Quarterly dividend:$0.91/share
- Ex-dividend/record date:Feb. 19, 2026
- Payable date:Mar. 12, 2026 [31]
Bull case vs. bear case: what the debate really comes down to
The bull case for Microsoft stock into 2026
Investors leaning bullish typically point to:
- Azure + AI demand still running ahead of capacity, implying a long runway for consumption growth. [32]
- Large and growing contracted backlog (RPO) that suggests durability and visibility. [33]
- Copilot adoption expanding from enterprise toward SMB—plus continued product iteration in Microsoft 365. [34]
- Microsoft’s ability to keep returning cash to shareholders even while investing heavily (Microsoft said it returned $10.7B via dividends and buybacks in FY26 Q1). [35]
The bear case investors still won’t ignore
The more cautious view usually centers on:
- Capex intensity and margin pressure: AI infrastructure can weigh on gross margin near-term even if it wins long-term. [36]
- AI monetization friction: customer resistance and the “pilot-to-production” gap can slow revenue realization, as reflected in December’s sales target controversy. [37]
- Competition in hyperscale cloud and AI infrastructure is accelerating, with peers also building aggressively. [38]
- Regulatory/legal noise can resurface even after discrete issues (like Teams bundling) are addressed. [39]
What to watch when the market opens on Dec. 26
If you’re tracking MSFT into the opening print Friday, focus on a short checklist:
- Any fresh Microsoft/OpenAI or AI spending headlines that shift the “monetization vs. cost” debate. [40]
- Nasdaq/mega-cap tone after the holiday pause—thin liquidity can exaggerate moves. [41]
- Microsoft 365/Copilot commercial momentum: enterprise seat expansion and SMB adoption signals are key to sentiment. [42]
- Any regulatory spillover from Europe or elsewhere (less likely to move the stock intraday, but relevant for risk framing). [43]
This article is for informational purposes only and is not investment advice. Stock prices and analyst estimates can change quickly, especially around holidays and earnings windows.
References
1. www.nyse.com, 2. finviz.com, 3. www.marketwatch.com, 4. www.microsoft.com, 5. www.microsoft.com, 6. www.microsoft.com, 7. www.microsoft.com, 8. www.reuters.com, 9. www.microsoft.com, 10. www.microsoft.com, 11. www.reuters.com, 12. www.reuters.com, 13. www.reuters.com, 14. ec.europa.eu, 15. www.reuters.com, 16. stockanalysis.com, 17. www.benzinga.com, 18. www.barrons.com, 19. www.investopedia.com, 20. www.marketwatch.com, 21. www.microsoft.com, 22. www.microsoft.com, 23. www.microsoft.com, 24. www.marketbeat.com, 25. finviz.com, 26. www.alphaquery.com, 27. www.microsoft.com, 28. public.com, 29. www.marketbeat.com, 30. www.microsoft.com, 31. www.otcmarkets.com, 32. www.microsoft.com, 33. www.microsoft.com, 34. www.microsoft.com, 35. www.microsoft.com, 36. www.microsoft.com, 37. www.reuters.com, 38. www.wsj.com, 39. ec.europa.eu, 40. www.reuters.com, 41. www.nyse.com, 42. www.microsoft.com, 43. apnews.com
