Prediction: This Will Be Microsoft's Stock Price at the End of 2026

Core Insights - Microsoft had a strong performance in 2025, with its stock price increasing from approximately $420 to around $490, reflecting a 17% return, although it underperformed compared to the S&P 500's 18% gain [1] - The outlook for 2026 remains uncertain, with questions about whether Microsoft can outperform the market or will continue to match or lag behind it [2] AI Positioning - Microsoft is positioned as a facilitator in the AI sector rather than a primary developer, which presents both advantages and disadvantages as the industry evolves [4] - The Azure cloud computing business is a significant asset, showing a 40% year-over-year revenue growth in Q1 FY 2026, outpacing AWS's 20% growth [5] - Microsoft's strategy of offering multiple AI models on Azure, including those from competitors, allows it to benefit from the overall increase in AI usage [6] Product Growth - The integration of AI into Microsoft Office products through the Copilot add-on has led to notable growth, with Microsoft 365 commercial growth at 17% and consumer growth at 26% [7] - Projections for FY 2026 indicate a 16% sales growth for Microsoft, with a consensus estimate of 15% revenue growth for FY 2027, aligning with historical performance trends [8] Valuation and Market Position - Microsoft maintains a neutral stance in the AI development landscape, with the Copilot feature still needing to demonstrate its value to users [9] - The company is currently carrying a premium valuation in the market [9]