Microsoft (NASDAQ:MSFT) remained under the spotlight Friday as Stifel analysts predicted the stock will remain range-bound in the near term until investors gain confidence in the Azure and Commercial Cloud growth trajectory. Shares dipped slightly in premarket trading.
Analyst Brad Reback noted that Microsoft needs to show that Azure can sustain growth beyond capital expenditure (capex) increases, similar to the period from FY17 to FY23 before the company ramped up spending on generative AI. While Reback expects Microsoft to maintain double-digit revenue and profit growth, he lowered his price target to $475, citing higher capex projections.
The firm anticipates Microsoft will add $25 billion to $30 billion in incremental capex for fiscal 2026, aligning with Azure's estimated 30% growth rate. The report follows discussions with Microsoft's investor relations team, which reaffirmed its $87 billion capex plan for fiscal 2025 and projected slower growth in 2026.
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