Microsoft (MSFT) stock has taken a sharp plunge this Wednesday. The stocks of the firm fell 7% over reports of Microsoft’s moderate cloud progress, taking the markets by surprise. Revenue from Azure, Microsoft’s cloud domain, hovered at over 39%, lower than the first quarter’s stats of 40%. Can MSFT recover soon, reversing fragile expectations with a strong 2026 outlook?

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MSFT Stock Down: Details

Microsoft stock fell 7% Wednesday as the company reported fresh earnings, with a slight disarray in its cloud storage business. The firm stated that 39% of revenue was generated from Azure and associated cloud business, which is lower than the earlier reported stats of nearly 40%. In simpler terms, investors expected Microsoft’s rapid cloud growth, considering the firm’s expanding AI narrative and spending on the domain, leaving its stock to take a sharp direct hit

“Revenue from Azure and other cloud services grew 39%, compared with 40% growth in the fiscal first quarter. Analysts surveyed by StreetAccount and CNBC had expected 39.4% and 38.9% growth, respectively.” Data from CNBC reported

Despite the aforementioned hiccup, the collective team of analysts has ended up issuing a buy call for MSFT stock, stating that the company is set to surpass constrained cloud elements to produce better results.

“Truist acknowledged that Azure growth continues to be supply-constrained but emphasized that management reiterated demand exceeds available capacity, with that capacity being allocated across first-party AI products, research and development, and Azure.” As shared by Investing

The firm is also betting big on AI, allocating its spending and attention to bolster the budding amplified MSFT artificial intelligence domain.

“We are only at the beginning phases of AI diffusion, and already Microsoft has built an AI business that is larger than some of our biggest franchises. We are pushing the frontier across our entire AI stack to drive new value for our customers and partners,”said Satya Nadella, chairman and chief executive officer of Microsoft.

MSFT Stock Price Outlook for 2026

According to TipRanks MSFT stock stats, the firm may end up hitting its ambitious price target of $678 in the next 12 months.

“The average price target for Microsoft is 617.31. This is based on 34 Wall Street analysts’ 12-month price targets, issued in the past 3 months. The highest analyst price target is $678.00, and the lowest forecast is $450.00. The average price target represents a 28.17% increase from the current price of $481.63.”

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