For 2026, Microsoft (MSFT) has guided for capital expenditure of $190 billion. The big spending on AI infrastructure has translated into investors being cautious. As a result, MSFT stock has declined by 9.83% in the last 52-weeks.
However, the sideways to lower price-action seems like a good buying opportunity. Even as the markets remain cautious, Microsoft’s AI backlog (commercial remaining performance obligation) swelled to $627 billion. This provides clear revenue and cash flow visibility.
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However, analysts have been positive on Microsoft. Recently, Wedbush reiterated its “Outperform” rating for the stock with a price target of $575. This view comes amid Microsoft and OpenAI having renegotiated their revenue-sharing plan. While OpenAI is expected to save $97 billion in projected payments, Microsoft will benefit from being paid sooner. According to Wedbush, the “revised structure” is a “positive for Microsoft and its overall AI strategy.” This view is likely to alleviate market concerns around the deal.
About Microsoft Stock
Headquartered in Redmond, Washington, Microsoft is a technology giant with a market valuation of $3.04 trillion. The company is a provider of software, services, devices, and solutions globally. Microsoft’s business segments include Productivity and Business Process, Intelligent Cloud, and More Personal Computing.
For Q3 FY26, Microsoft reported revenue growth of 18% year-over-year (YOY) to $82.9 billion. For the same period, operating income swelled by 20% to $38.4 billion.
Besides the headline numbers, a key highlight was the company’s AI business annual revenue run rate surpassing $37 billion, which was higher by 123% YOY. This underscores the point that the company’s focus on AI infrastructure and solutions is delivering results.
However, MSFT stock has been relatively weak with a correction of 19.94% in the last six months. A reversal is likely as the big capex starts showing results in terms of growth acceleration.
Elevated Capex Unlikely to be a Concern
In June 2025, PricewaterhouseCoopers opined that AI adoption is likely to boost global GDP by an additional 15% by 2035. Amazon (AMZN) CEO Andy Jassy recently called AI as “a once-in-a-lifetime opportunity where the current growth is unprecedented and the future growth even bigger.”
