Microsoft Stock Price at $508: AI, Cloud, and $700 Price Outlook

NASDAQ:MSFT – Microsoft’s $3.78 Trillion AI and Cloud Powerhouse

Microsoft Corporation (NASDAQ:MSFT) trades at $508.39, marginally lower by 0.13%, commanding a market capitalization of $3.78 trillion. Analysts maintain a consensus target of $615.38, offering nearly 21% upside, while the most bullish outlooks extend to $675–$700. The company’s balance between AI leadership, cloud scale, and profitability cements its role as the most defensive big-tech play.

NASDAQ:MSFT Revenue Growth and Profitability Strength

Microsoft generated $76.4 billion in Q4 FY2025 revenue, up 17% YoY, beating the Street’s $73.8 billion estimate. Annual revenue reached $281.7 billion, while net income hit $101.83 billion with diluted EPS at $13.64. Operating margin came in at 44.9%, well above guidance. Revenue growth accelerated from 15% in Q3 to 18.1% YoY, with forecasts of $322.5 billion in FY2026 and $369.7 billion in FY2027.

NASDAQ:MSFT Azure Cloud Expansion and AI Dominance

The Intelligent Cloud segment remains the core growth engine. Azure revenue expanded 34% in FY2025, surpassing $75 billion annually, while the broader server and cloud segment climbed 23.3%. Growth accelerated from 20.8% to 25.6% in the latest quarter. Azure now counts over 60,000 AI customers, outpacing AWS and Google for generative AI contracts. Its integration with OpenAI models continues to drive market share gains and client stickiness.

NASDAQ:MSFT Heavy CapEx and Nebius AI Deal

Capital expenditures surged 27% YoY to $24.2 billion, with Q1 FY2026 projected to exceed $30 billion. Microsoft secured a $17.4 billion Nebius AI infrastructure contract, ensuring Nvidia GPU capacity over five years, expandable to $19.4 billion. This guarantees Azure’s leadership in generative AI, model training, and inference capabilities, while management highlighted $368 billion in cloud backlog requiring delivery.

NASDAQ:MSFT Gaming and Activision Blizzard Integration

The gaming division, 9% of total revenue, rose 9.1% in FY2025, but only because of Activision’s contribution of $10.7 billion. Xbox hardware revenue slumped 25%, with global console shipments plunging 32.8%. Activision’s integration boosted Game Pass and streaming offerings, yet Microsoft guided mid-single-digit gaming declines in the next quarter. Console weakness continues, but recurring content and franchise engagement offset hardware softness.

NASDAQ:MSFT Productivity and Enterprise Software Resilience

Microsoft’s software moat remains unchallenged. With 400 million commercial Office users and adoption across 95% of Fortune 500 firms, switching costs are prohibitive. LinkedIn has surpassed 1 billion members, creating a closed-loop ecosystem with Dynamics 365 and Teams. SQL Server and Windows Server remain growth contributors, averaging 11%+ expansion, even as hybrid workloads shift to Azure. Copilot AI integration across Office enhances productivity stickiness and long-term monetization.

NASDAQ:MSFT Balance Sheet, Dividends, and Buybacks

Operating cash flow stood at $136.2 billion, with $61.07 billion in free cash flow despite heavy CapEx. Cash reserves totaled $94.6 billion versus $112.2 billion debt, ensuring balance sheet flexibility. The annual dividend is $3.64 per share, yielding 0.72%, with a conservative 23.75% payout ratio. Buybacks remain active, offsetting dilution. Microsoft continues to prioritize shareholder returns while investing aggressively in growth.

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NASDAQ:MSFT Valuation and Analyst Targets

The stock trades at a forward P/E of 32.9 and a PEG ratio of 2.23, supported by projected EPS growth of 14–19% annually. Analysts forecast EPS of $15.52 in FY2026, $18.20 in FY2027, and $21.68 in FY2028. With a Wall Street consensus price target of $615.38, Microsoft offers nearly 21% upside from current levels, and the most bullish projections call for $650–$700 within 12–18 months.

NASDAQ:MSFT Competitive Risks and Market Positioning

Microsoft’s competitive threats come from Google’s Gemini 3 and Amazon-Anthropic Claude AI models, but Azure’s scale and deep OpenAI integration keep it ahead. Risks stem from ballooning CapEx, which is expected to surpass $90 billion annually through 2028. However, Microsoft’s entrenched ecosystem, recurring software revenue, and unmatched free cash flow shield it from volatility.

NASDAQ:MSFT Final Verdict – A Strong Buy on AI and Cloud Scale

With cloud accelerating at 34%, free cash flow exceeding $60 billion, and a balance sheet built for both dividends and expansion, Microsoft’s fundamentals remain unmatched. At $508.39, the stock presents a compelling entry for investors. Based on its growth trajectory and valuation discount to peers, NASDAQ:MSFT is a Strong Buy, with targets at $615–$650 in the near term and potential stretch toward $700 as AI monetization scales.

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