Scotiabank Lowers Microsoft Price Target to $470

Scotiabank analyst Patrick Colville lowered the price target on Microsoft (NASDAQ: MSFT) to $470 (from $550) while maintaining a Sector Outperform rating.

“Into Microsoft’s print we offer some last minute thoughts based on our conversations with investors over the past week.

The debate clearly hinges on: (1) the magnitude of the Azure acceleration and (2) the capex outlook.

Our partner checks – including this fascinating one – indicate strong enterprise demand, but capped upside to Azure given tight supply.

We think the most likely outcome is Azure CC growth of 41% in F4Q and guidance to 42% for F1Q.

This will likely not be enough to keep MSFT shares flat as we model $265B in F27 capex and think management will provide directional commentary such as ‘Expect FY27 capex growth to moderate slightly compared to FY26’.

We expect Microsoft’s free cash flow to turn negative in F27 and expect a >$20B capital raise to provide maximum financial flexibility.

Given the market’s reaction to recent GOOGL and ORCL prints and capital raises, we think MSFT shares could be pressured near-term.

Nonetheless, for investors who are able to buy-and-hold, MSFT looks attractive.

In our CIO fieldwork, Microsoft is a clear AI spending beneficiary that will likely see durable long-term AI monetization from Copilot and Azure, which should ensure a high ROI on current capex.”

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.