NEW YORK, March 23, 2026, 10:19 EDT
Microsoft climbed roughly 1% in early New York trading Monday, lifted by renewed optimistic calls suggesting the recent pullback was overdone. Still, doubts linger among investors over how soon the company’s heavy AI investments will deliver returns. Shares recently changed hands at $385.71, up 1%.
Why does it matter? Microsoft has turned into Wall Street’s go-to gauge for whether Big Tech can squeeze real earnings from AI investments. Back in January, the company logged a hefty $37.5 billion in quarterly capital spending—fueling chips, servers, and data centers. Azure, its cloud business, posted 39% growth, just barely beating forecasts. That combo dragged down sentiment across software and cloud stocks.
Dan Romanoff, a senior equity analyst at Morningstar, called Microsoft his firm’s “top pick in software” on Monday, noting shares still sit roughly 33% under Morningstar’s $600 fair value estimate. Romanoff pointed out that Microsoft is likely to weather pressure better than most software rivals, with customers deeply integrated into Azure, Office, and a suite of bundled products that’s tough to disentangle. Morningstar, Inc.
On Monday, TipRanks flagged a bullish call from Agar Capital, who’s set a $600 price target on the stock. Evercore’s Kirk Materne, also writing Monday, maintained his Buy rating and $580 target, though he cautioned “no quick fix to the capacity issues.” Materne added that faster Azure growth probably won’t show up until the second half of 2026. TipRanks
Vladimir Dimitrov, CFA, weighed in with a more restrained take on Seeking Alpha this Sunday. He warned investors against reading the recent slide as a green light. Azure’s growth, in his view, held up, but he flagged margin pressures that might persist for the rest of the year. He also pointed to ongoing macro headwinds as a drag on valuation.
Bulls at Microsoft are banking on sheer scale. The company’s contracted cloud backlog jumped to $625 billion last quarter—more than twice what it was, and topping Oracle’s $523 billion. CEO Satya Nadella said Microsoft is juggling limited capacity, aiming to build what he called the “best” lifetime-value portfolio. Reuters noted last month that Microsoft, Alphabet, Amazon and Meta are all set for a combined $650 billion in AI infrastructure spending by 2026, a level Bridgewater’s Greg Jensen described as marking a “more dangerous phase” of the run-up. Reuters
The danger now: investors could keep turning their backs on trades that require patience. On Monday, Reuters flagged a shift out of inflation-sensitive assets with oil jumping, while Charu Chanana at Saxo pointed out that rising yields put pressure on long-duration names like tech by squeezing their valuations. For Microsoft, that environment means the road to regaining investor confidence probably runs through Azure growth picking up and margins stabilizing.
There are some initial signs from Microsoft. Back in January, Nadella revealed that M365 Copilot—the AI-powered assistant for business, priced at $30 a month—had chalked up 15 million annual users. Shares, though, have dropped about 21% this year, and for investors, the jury’s still out. They’re pushing for more concrete evidence that Copilot and Azure can actually drive higher profits, not just hike up the costs.
