Microsoft’s Fairwater AI data centers have provided a solid boost to its Azure software’s growth and success of late, a catalyst for MSFT stock rising. UBS analyst Karl Keirstead said checks with industry partners found no major delays in the Fairwater rollout. The facilities, located in Wisconsin, began going live in stages last year and are set to reach 500 megawatts of capacity by mid-2026.

The expected success of these data centers will further push Microsoft to the head of the charge in AI in 2026. Compared to Amazon (AMZN) and Alphabet (GOOGL), who are seen as rivals in the tech sector, Microsoft’s AI efforts have been in the middle of the pack. Fortunately, Microsoft’s investments in OpenAI are paying off indirectly, which could fuel MSFT. OpenAI expects $115 billion in losses through 2029. However, a lot of that money will be going into data centers, like Microsoft’s Azure. As a result, MSFT is one of the biggest benefactors from the continued influence of AI.

This past week, Morgan Stanley analysts have initiated a bullish projection for Microsoft (MSFT) stock based on favorable software spending plans. This past week, analysts labeled MSFT as an “overweight” stock, maintaining a price target of $650. This forecast suggests an upside potential of nearly 38%. Therefore, the dip to start the year could be a solid buy opporunity, with an ROI of 38% forecasted for the end of the year if investors buy MSFT now.

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On the other hand, despite the stronger near-term outlook, other firms are a bit more conservative. UBS trimmed its price target on Microsoft to $600 from $650, while maintaining a Buy rating. The firm said Azure remains the company’s most important growth driver, supported by accelerating enterprise adoption of AI tools. However, AI bubble concerns still appear to exist across Wall Street.

Meanwhile, Wedbush’s Dan Ives calls Microsoft a “core winner” for 2026, arguing that Azure could move from pilots to broad enterprise deployments as CIO budgets shift. Evercore ISI’s Julian Emanuel adds a cautionary note but says systemic risks tied to the AI trade remain limited, given healthy hyperscaler balance sheets and muted cross-holdings.