Microsoft Stock Surge: Analyst Highlights Expanding Cloud Footprint and OpenAI Momentum

Microsoft Corp (NASDAQ:MSFT) stock gained almost 3% on Friday as investors continue to lean into strong cloud demand and upbeat AI adoption signals, even while the Technology sector is down 0.7% and the S&P 500 is up 0.2%.

The latest earnings snapshot showed a 14th straight "double beat," with quarterly revenue of $90.01 billion (+18%) and EPS of $4.74 topping consensus. The overall cloud revenue rose 27% to $59.3 billion.

Intelligent Cloud revenue climbed 32% to $39.3 billion, and Azure and other cloud services revenue grew 43%, helping frame why buyers are still willing to pay up for the AI/cloud story.

BNP Paribas analyst Stefan Slowinski said Microsoft strengthened its position as a leading AI beneficiary after fiscal fourth-quarter results showed progress across Azure, Microsoft 365 Copilot, GitHub Copilot and AI infrastructure.

AI Monetization Gains Traction

Slowinski said Microsoft’s fiscal fourth-quarter results addressed nearly every major investor concern going into the report and helped shift sentiment around the stock.

The analyst said Azure again outperformed, while Microsoft also showed more tangible AI monetization across the software stack through Microsoft 365 Copilot and GitHub Copilot, as well as across the infrastructure stack through Azure.

He said Microsoft now has several potential upside drivers, including broader use of usage-based pricing in Microsoft 365 Copilot, more E7 attach opportunities, higher GPU rental pricing and stronger OpenAI momentum in July.

Azure Growth Could Accelerate

Slowinski said Microsoft’s fiscal first-quarter 2027 Azure guidance of 45% reinforces the company’s acceleration path.

The analyst said Azure growth could move toward the high-40% range by the second quarter of fiscal 2027 as more AI capacity comes online and demand remains strong.

He raised his fiscal 2027 constant-currency Azure estimate to about 44% from roughly 41%. He said that forecast assumes only modest growth in quarterly net new Azure revenue in the second half of fiscal 2027.

On capital spending, Slowinski said Microsoft maintained its calendar 2026 cash capex outlook, but he now forecasts about $220 billion of capex in fiscal 2027, down from his prior $260 billion estimate.

The analyst linked the lower forecast partly to accounting lease changes and management’s commitment to remain free-cash-flow positive in fiscal 2027.

Price Forecast Stays At $549

Slowinski reiterated an Outperform rating and kept his $549 price forecast, implying 22% upside from the July 30 price of $451.10.

The analyst said BNP made modest EPS estimate changes to reflect a slightly higher tax rate and management’s fiscal 2027 operating-margin commentary.

He values Microsoft using a sum-of-the-parts framework with a 25-times fiscal 2028 price-to-earnings multiple and includes the company’s stake in OpenAI.

Top ETF Exposure

• State Street Technology Select Sector SPDR ETF (NYSE:XLK): 9.24% Weight
• Vanguard S&P 500 Growth ETF (NYSE:VOOG): 9.47% Weight
• T. Rowe Price Growth Stock ETF (NYSE:TGRW): 9.37% Weight

Significance: Because MSFT carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.

Price Action

MSFT Stock Price Activity: Microsoft shares were up 2.54% at $462.56 at the time of publication on Friday, according to Benzinga Pro data.

Photo: Shutterstock