Stifel Lowers Microsoft’s Price Target to $640
Stifel analyst Brad Reback lowered on October 30, 2025, the price target on Microsoft to $640 (from $650) while maintaining a ‘Buy’ rating on the stock.
“While MSFT posted a solid 1Q print, with 39%-CC Azure growth at the low end of buyside expectations, the stock traded off ~4% AHs as persistent Azure capacity shortages (expected for several more quarters) caused 2Q Azure guidance of 37%-CC to be toward the bottom of buyside targets.
Management is moving aggressively to address this situation, raising FY26 capex growth expectations to >60% with spend skewed toward compute.
We now model $148B, up 68% YoY, vs our previous estimate of $120B (+36%).
That said, this accelerated spend comes with a somewhat near-term GM margin headwind (magnitude unclear), and when coupled with increased OPEX spending for high-priced (salary/ compute) AI talent, we expect op-margins to compress over the course of FY26, ending the year at ~43%, well below 1Q’s 48.9% level that benefited (~100 bps) from in-period rev-rec, even as FY26 op-margins remain “essential-flat”, in line with management FY commentary last quarter.”
The price target and rating on this page are the opinion of the issuing research firm and its analyst, not of Price Target. This page is published for informational purposes only and is not investment advice, a recommendation, or an offer to buy or sell any security. Past performance does not guarantee future results. Consider your own circumstances and consult a licensed financial adviser before making investment decisions.
This research note is reproduced verbatim from the issuing firm. Price Target never edits, paraphrases or alters analysts’ words — we only republish them in one place.
