NEW YORK, August 11, 2026, 08:31 EDT
- Bernstein raised its price target for Microsoft to $660, up from $647.
- Microsoft stock ended Monday’s session at $506.06, gaining 1.2%.
- Last quarter, Azure recorded a 43% growth in constant currency.
- July’s CPI is due on Wednesday, followed by PPI on Thursday.
Bernstein analyst Mark Moerdler boosted Microsoft Corp.’s NASDAQ:MSFT price target to $660 from $647 following a renewed surge in Azure growth, which shifted the conversation on Microsoft’s AI investments. Moerdler maintained his Outperform rating on the stock on Monday.
The target is 30% higher than Monday’s closing price of $506.06. This target is backed by a straightforward argument: While Microsoft’s capacity agreements are significant, its current cloud growth and backlog now provide greater justification for that level of spending.
The stock rose 1.2% on Monday. MarketWatch reports it has advanced nearly 30% since the fiscal fourth-quarter results in late July. As of the time of writing, regular trading in the U.S. had yet to begin.
“Even after the significant recent increase, the stock remains at a notable discount compared to its historical valuation multiple range,” Moerdler said. Microsoft currently trades at around 25 times forward earnings, compared to 33 times this time last year. MarketWatch
The latest quarter demonstrated the business fundamentals. Revenue and profit surpassed forecasts, with Azure growth picking up pace. Capital spending, including leases, came in lower than anticipated before the report.
| Fiscal Q4 measure | Reported | Wall Street estimate | Comparison |
|---|---|---|---|
| Revenue | $90.0bn | $87.7bn | 18% increase from previous year |
| Adjusted EPS | $4.74 | $4.25 | $3.65 in the prior year period |
| Intelligent Cloud revenue | $39.3bn | $38.1bn | 32% gain over prior year |
| Azure growth, constant currency | 43% | 39%-40% prior guide | Rising from 40% in Q3 |
| Capital expenditure, including leases | $41.0bn | $42.0bn | $1.0bn less than forecast |
| Remaining performance obligations | $678bn | $647.6bn | $30.4bn higher than projection |
Data and consensus estimates referenced are from the July 29 earnings report. Microsoft announced Azure’s yearly revenue surpassed $100 billion for the first time.
Chief Executive Satya Nadella said, “This year, Azure revenue exceeded $100 billion for the first time, and Microsoft 365 Copilot achieved more than 30 million paid seats.” The number of Copilot seats increased from over 20 million in April. Yahoo Finance
The focus for investors has shifted. Following Azure’s strong performance, demand faces fewer doubts. The key concern now is if returns can be sustained by long-term commitments should pricing, utilization, or business model economics deteriorate.
| AI capacity measure | Amount | Timing or change | Investor read-through |
|---|---|---|---|
| Lease obligations | $329.1bn | Risen 255% | Mainly falls between fiscal 2027 and 2033 |
| AI hardware commitments | $169bn | Fiscal 2027 | Investment is weighted toward the early phase |
| AI hardware commitments | $25bn | After fiscal 2027 | Reduced risk in later years |
| AI share of Commercial Cloud revenue | 17% | Latest estimate | Non-AI sources account for most cloud revenue |
| Bernstein forward P/E | 25x | 33x in the past year | Valuation is still under its historic band |
Bernstein’s review of commitments indicates a sharp increase in leases, though hardware concentration appears lower beyond fiscal 2027. Moerdler adds that, should AI demand decrease, these data centers could handle typical cloud tasks.
The importance of flexibility lies in the difficulty of altering lease commitments. Hardware purchases, on the other hand, can be adjusted more rapidly. As a result, the $169 billion obligation for fiscal 2027 sets the more immediate benchmark for free cash flow.
Wall Street sentiment stays upbeat, but price targets differ significantly. Bernstein’s latest target is higher than the current consensus and exceeds most post-earnings calls.
| Analyst or group | Recommendation | Price target | Action date |
|---|---|---|---|
| Bernstein, Mark Moerdler | Outperform | $660 | Aug. 10 |
| Goldman Sachs | Buy | $640 | Jul. 30 |
| Morgan Stanley, Adam Wood | Overweight | $600 | Jul. 30 |
| Wolfe Research | Outperform | $550 | Jul. 30 |
| Barclays | Overweight | $512 | Jul. 30 |
| 33-analyst consensus | Buy | $557 average | Latest available |
Bernstein’s latest rating is reported by MarketWatch. The additional recent updates and the consensus from 33 analysts are gathered by Benzinga; this includes 31 Buy or Strong Buy recommendations and two Hold ratings.
The spread provides insight. Barclays sets its target at $512, just above where shares settled on Monday. Bernstein projects a $660 target, which relies on the market assigning a 27-times forward multiple if growth continues.
Microsoft’s market value surged by almost $450 billion on July 30, marking a new single-day record. The jump came after the company posted 43% growth for Azure and forecast approximately 45% growth for the cloud unit in the September quarter.
Risks continue to cluster. If Azure’s pace slows, the justification for prioritizing hardware orders could diminish. Elevated component costs, a concentrated customer base and negative free cash flow may also put pressure on the valuation multiple.
A rate-sensitive test is coming up in the week ahead. July consumer price data is due Wednesday, with producer price figures set for release Thursday at 08:30 EDT. An uptick in inflation could push discount rates higher, coinciding with Microsoft’s effort to persuade investors to back long-term AI gains.
The next milestone for the company is Azure’s anticipated 45% growth for the September quarter. Achieving this would bolster Bernstein’s case for a higher multiple. Falling short could once again draw focus to the $169 billion hardware commitment planned for fiscal 2027, reigniting debate over the stock.
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