Microsoft (MSFT) has been in a very volatile state over the last six months, and analysts suggest the stock now sits at a crossroads. In that span, shares are down 10%, yet analysts remain optimistic about its AI-driven growth, particularly in its Azure cloud platform. Azure has seen 40% year-over-year growth, and that growth is expected to continue in 2026 with the further success of AI.

Microsoft’s investments in OpenAI are paying off indirectly. 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.

Despite recent market declines, analysts view the upcoming earnings report as a pivotal moment, with expectations of continued strong performance from Microsoft’s AI-driven initiatives. Although price targets are mixed. While a few firms are conservative that MSFT stock price could hit a wall, most current price targets range from $600 to $650, suggesting significant upside potential from the current price of $454. Bernstein and Piper Sandler have the highest targets at $645 and $650, respectively.

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Furthermore, While indicating favorable software spending plans, Morgan Stanley’ recent report outlined expectations of software spending growth to increase by 9 basis points YoY, from 3.7% in 2025 to 3.8% in 2026. Microsoft is poised to benefit from this strengthening environment as CIOs anticipate 7.3% growth for the company in 2026. 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.