Microsoft (MSFT) shares gain as CIO survey shows demand for Azure reaching multi-year highs

TLDR

• Microsoft stock traded 1.4% higher at $401.10 on Thursday, briefly touching $405.99 during the day.
• Morgan Stanley analyst Josh Baer maintained a buy rating and $650 price target, calling Microsoft’s AI leadership “clear.”
• 62% of IT managers plan to increase spending on Azure over the next 12 months, compared to 57% last year.
• The class action lawsuits allege that Microsoft misled investors about the adoption of Copilot and AI.
• Earnings are scheduled for July 29, with a focus on Copilot’s adoption and AI monetization.

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Microsoft (MSFT) stock rose 1.4% on Thursday, trading at $401.10 after briefly hitting $405.99 during the day. The stock closed the previous session at $395.63, and trading volume was slightly below its daily average of about 37.5 million shares.

Microsoft Corporation, MSFT

The move comes two weeks after Microsoft announced its fiscal fourth-quarter earnings on July 29, and investors are interested.

Morgan Stanley Analyst Josh Baer maintained his Buy rating on MSFT prior to that print, with a price target of $650. He cited a recent CIO survey that showed Microsoft’s AI momentum is stronger than the market gives it credit for. The stock currently trades at about 16 times fiscal 2028 earnings, which Baer considers undervalued given Azure’s growth trajectory.

CIO survey data is hard to ignore. About 62% of respondents plan to increase spending on Azure in the next 12 months, up from 57% a year ago. Demand for Microsoft 365 is also growing – 65% of IT managers plan to spend more on it, compared to 55% last year and just 46% two years ago.

Furthermore, Microsoft’s premium software tiers are gaining traction. Half of IT managers surveyed expect to use E5 in the next year, and 21% plan to move to the more expensive E7 tier. This type of upsell is good news for revenue per user.

Overall, CIOs expect Microsoft spending to grow 7.6% over the next year — the highest rate among all vendors participating in the survey.

Azure and Copilot take center stage

Microsoft It also announced a partnership with 3M to develop AI data center infrastructure and enterprise transformation, adding another data point to the Azure ecosystem story.

Copilot adoption will be the number to watch on July 29. Analysts want to know how quickly IT managers’ attention can be converted into actual revenue. The latest earnings print gave investors some encouragement — Microsoft reported $4.27 EPS for the quarter ended April 29, beating estimates of $4.06, on revenue of $82.89 billion, up 18.3% year over year.

The average analyst price target sits at $559.63, which implies an upside of approximately 38% from current levels. Of the 42 analysts tracked, 41 have a buy rating and seven have a hold rating. The consensus is “Moderate Buy.”

Headwinds remain

Not all skies are clear. Some Wall Street firms trimmed their price targets ahead of earnings, citing concerns about higher AI infrastructure spending and pressures that could impact margins.

Legal headwinds are also increasing. Several class action notices have been filed alleging that Microsoft misled investors about Copilot and AI adoption rates, with a lead plaintiff deadline of August 11, 2026.

Microsoft’s Xbox division remains a drag on sentiment. After an $80 billion bet on gaming, the unit is undergoing a major restructuring, with layoffs and a recalibration of strategy.

CEO Judson Althoff sold 15,500 shares on June 1 at $460.99 per share, for a total of approximately $7.1 million. Executive Vice President Takeshi Nomoto sold 4,500 shares at $402.84 on June 10.

Citigroup upgraded MSFT from “market outperform” to “overweight” on Thursday. Wells Fargo maintained an “overweight” rating but lowered its price target from $650 to $625.