Wall Street analyst updates Microsoft stock price target

Core Viewpoint - A Wall Street analyst at TD Cowen has reaffirmed a positive long-term outlook on Microsoft while adjusting the stock's price target downwards ahead of the upcoming quarterly earnings report [1][2]. Price Target Adjustment - TD Cowen maintained a 'Buy' rating on Microsoft but reduced the price target from $655 to $625, indicating a more cautious near-term outlook despite confidence in Microsoft's AI positioning [2][6]. - The revised price target suggests an upside of nearly 40% from Microsoft's current share price of approximately $452 [2]. Demand and Growth Expectations - Recent channel checks indicate stable to strengthening demand for GPU and CPU infrastructure, supporting expectations that enterprise and cloud customers are heavily investing in AI-related workloads [4]. - TD Cowen highlighted potential upside for Microsoft's Azure cloud business, estimating a possible two percentage points improvement in constant-currency growth due to sustained demand for AI services [5]. Capacity Constraints - Capacity limitations are expected to keep Microsoft shares range-bound in the near term as investors await clearer evidence of infrastructure supply meeting demand [6]. - The lack of near-term growth acceleration is cited as a key risk, particularly with high expectations surrounding AI monetization [6]. Long-term Prospects - TD Cowen remains optimistic about Microsoft's long-term prospects, anticipating growth reacceleration in the second half of 2026 as capacity expands and AI workloads scale across Azure and the broader Microsoft ecosystem [7]. Wall Street Sentiment - Overall, Wall Street sentiment towards Microsoft is bullish, with a strong buy consensus among analysts projecting significant upside over the next year [8]. - Based on 34 analysts tracked by TipRanks, Microsoft holds a Strong Buy rating, supported by 32 Buy recommendations, two Holds, and no Sell ratings [8]. - Analysts' 12-month price targets average $630.32, implying about 39% upside from the stock's recent price of roughly $453, with the most optimistic projection at $678 and the lowest at $500 [9].