Prediction: Microsoft Just Became One of Big Tech's Best Values

Microsoft trades at $421.92 after declines of 11.26% year to date and 8.54% over 12 months, with a 24/7 Wall St. 12-month price target of $510 and a buy recommendation at 70% confidence. Fiscal Q3 2026 results reported April 29, 2026 showed EPS of $4.27 versus $4.07 expected and revenue of $82.89 billion, up 18.3% year over year. Azure grew 40%, and the AI business surpassed an annual revenue run rate of $37 billion, up 123% year over year. The outlook cites continued AI capex payoff, usage-based billing for GitHub Copilot, and reasonable valuation metrics, while risks include rising capex and increasing OpenAI-related losses and antitrust scrutiny.

"Microsoft ( NASDAQ:MSFT | MSFT Price Prediction) trades at $421.92 after a rough start to 2026, down 11.26% year to date and 8.54% over the past 12 months. Our 24/7 Wall St. price target for Microsoft is $510, implying roughly 20.9% upside over the next 12 months. Our recommendation is buy, with a confidence level of 70%. The AI capex story still has more runway than the share price implies."

"Fiscal Q3 2026, reported April 29, 2026, was a clean beat. EPS came in at $4.27 versus $4.07 expected and revenue hit $82.89 billion, up 18.3% year over year. Azure grew 40%, and CEO Satya Nadella highlighted that the "AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.""

"Azure is compounding at 39% to 40%, AI revenue is tracking a $37 billion run rate growing 123%, and the June 1, 2026 shift of GitHub Copilot to usage-based billing could convert capex into margin expansion. The PEG ratio of 1.29 looks reasonable for a 30%+ ROE business. If forward EPS reaches roughly $21 in FY27 and the market reapplies a 27x multiple, MSFT prints the $560.88 consensus target. Continued AI capex payoff plus easing supply constraints could push shares toward $600."

"The bear case starts with capex. CapEx hit $30.88 billion in Q3 FY26, up 84% year over year, and OpenAI-related losses are climbing ($3.1 billion in Q1 FY26 versus $523 million prior year). A former Microsoft VP recently argued the company " missed the AI wave " with only 3.3%"

Read at 24/7 Wall St.