Wall Street Says Microsoft Can Hit $650. Here’s the Path

Core Insights - Microsoft has shown solid returns in 2025, with shares currently trading around $479, below the 52-week high of $553.50 [2] - The company reported revenue of $77.67 billion in the latest quarter, exceeding estimates by nearly $2.3 billion, reflecting an 18.4% year-over-year growth [2][5] - Azure's growth at 40% year-over-year indicates strong enterprise digital transformation [2][5] Analyst Sentiment - Analysts are bullish on Microsoft, with a consensus 12-month price target of $625.41, suggesting a 30.5% upside from current levels [4] - A near-unanimous support exists among analysts, with 56 out of 57 rating the stock a buy or strong buy [4][5] Growth Projections - Revenue growth is expected to continue in the high teens, driven by Azure's expansion and increased AI adoption [5] - Earnings per share estimates are rising, with expectations of continued double-digit earnings growth as Microsoft invests in AI infrastructure [5] Valuation Metrics - At the current price of $479, Microsoft trades at approximately 30x forward earnings, while a target price of $650 would imply a valuation of about 41x forward earnings [6] - This premium valuation is justified by the company's growth rate of 12.7% annually, alongside a 48.9% operating margin and a 35.7% profit margin [6][7] Market Comparison - The S&P 500 trades around 22x forward earnings, indicating that Microsoft commands nearly double the market multiple [7] - Microsoft's scale, profitability, and growth trajectory support this premium valuation, with trailing revenue of $293.81 billion and a return on equity of 32.2% [7]