Microsoft (MSFT) Price Target Lowered at Stifel on Margin Pressure Concerns

Group 1 - Microsoft Corporation is currently a focus for AI stocks on Wall Street, with Stifel analyst Brad Reback lowering the price target to $520.00 from $640.00 while maintaining a Buy rating due to near-term expense pressures limiting margin upside [1] - Stifel anticipates Microsoft to exceed expectations for Azure cloud services growth by an estimated 200 basis points, reaching 39% growth on a constant currency basis, supported by a solid macro backdrop and rapid OpenAI usage growth [2] - Despite tougher year-over-year comparisons for Azure in 3Q26, recent data center capacity expansions should allow Microsoft to maintain similar incremental sequential adds as in 3Q25, leading to an estimated 38% year-over-year constant currency growth guide [3] Group 2 - The company is expected to face operating margin pressure throughout FY26 as gross margins compress and operating expenses rise due to high-priced AI professionals [3] - While Microsoft shows potential as an investment, certain AI stocks are believed to offer greater upside potential and less downside risk [4]