Microsoft Price Target Trimmed In Bullish Note – Not All Cuts, or Stocks Created Equal

Microsoft's stock price (NASDAQ: MSFT) is 0.58% lower into the open today following a mixed analyst note from Wells. While some analysts have adjusted their price targets, the overall sentiment surrounding the tech giant is optimistic, driven by its strategic AI investments and robust cloud service performance.

Wells Fargo today lowered its price target for Microsoft from $700 to $665, while maintaining an “Overweight” rating. The firm identifies AI as the central investment theme for 2026, focusing on infrastructure, incumbents, and innovation. Despite anticipating varied adoption rates, Wells Fargo believes the overarching secular trend will ultimately drive performance. This perspective highlights the long-term growth potential associated with Microsoft's AI endeavors.

Other analysts have also weighed in on Microsoft's AI trajectory.

Goldman Sachs projects a 17% earnings growth for Microsoft in fiscal year 2026, a notable increase from the 10% growth expected in FY25. This optimistic forecast is attributed to high-margin AI inference offerings and strategic partnerships, such as the revenue-sharing agreement with OpenAI. Goldman Sachs adjusted its price target to $450 from $500, maintaining a “Buy” rating.

Wedbush Securities raised its price target for Microsoft from $515 to $600, citing accelerated AI adoption. The firm emphasizes Microsoft's leadership in enterprise AI, particularly through its Azure and Copilot offerings, anticipating these to significantly influence the company's growth through fiscal 2026.

Price Targets

Despite the optimistic outlook, some analysts caution about potential challenges. Infrastructure constraints, particularly related to power grid limitations in the U.S., could impact the rapid deployment and expansion of AI services. Moreover, Microsoft faces stiff competition from other tech giants such as Google, which has made significant strides in AI development. Google's advancements have even led to shifts in market capitalization rankings, with Google surpassing Microsoft in certain metrics.

The consensus among analysts is that Microsoft's strategic investments in AI position it well for sustained growth in 2026 and beyond. While some price target adjustments reflect a degree of caution, the overall sentiment remains positive.

Today's move from Wells Fargo highlights an overall bullish narrative (with a perceived upside of ~37%), albeit with a more measured view. Not all price target cuts are created equal.