In our article of 22 January 2026, we wrote that Microsoft was in a transitional phase. At the time, the share was trading around $460 and we indicated that a further correction towards the $400 zone was possible before room would emerge for a new upward movement towards the $630 price target.
Since then, the share has indeed shown further weakness and the technical picture has become clearer. The time has therefore come to reassess our view and determine whether the long-term scenario remains valid.
You can reread the previous article here to be fully up to date: “Microsoft: transition period offers great opportunities. Target price $630”
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How were the quarterly results of 28 January?
Microsoft reported strong figures for the second fiscal quarter ending 31 December 2025. Revenue came in at $81.3 billion, an increase of 17 percent compared to a year earlier. Reported net income amounted to $30.9 billion. On an adjusted basis, excluding certain investment-related effects, profit reached $38.5 billion, indicating solid underlying performance.
Cloud remained the primary growth engine. Revenue within Intelligent Cloud rose to $32.9 billion, representing 29 percent growth over the year, driven mainly by Azure. At the same time, Microsoft indicated that margins are under pressure due to substantial investments in AI infrastructure and the ongoing transition towards cloud activities .
The market reaction was mixed. Although revenue and profit exceeded expectations, investors focused on the pace of Azure growth and the scale of AI investments. In after-hours trading, the share declined approximately 5 to 6 percent, partly due to concerns about the speed at which these investments will translate into structural profit growth .
What is the view of analysts on Microsoft’s share price?
Among analysts, sentiment remains predominantly positive. The average twelve-month price target stands at around $595, which aligns with our earlier objective. Fundamental analysts mainly point to structural growth within Azure, broad AI integration across the product portfolio and the strong balance sheet .
Technical analysts have become more cautious due to the recent price weakness, but view the current movement primarily as a corrective phase within a larger upward trend.
What is Yelza’s view on Microsoft’s share price?
Below you will find Microsoft’s price chart from the beginning of 2021. The arrows indicate the most likely scenario.
As we indicated in January, Microsoft remains in a broader corrective phase. The share is currently trading around the previously identified support zone of $400, a level that is considered a key turning point within the technical framework.
We previously suggested considering taking a position around this level. At the same time, given the current market sentiment, we do not rule out that after a temporary rebound towards $460, a further decline towards the $338 zone could follow. We consider this lower level to mark the definitive completion of the corrective phase.
In that scenario, it may be considered to build the position gradually: starting around the current level and expanding if the share declines further towards $338. A more defensive alternative is to enter only as the price approaches this lower support zone. We expect that this correction will ultimately form the basis for a new structural upward movement towards new record highs. The long-term price target therefore remains unchanged at $630.
Conclusion
The recent weakness in Microsoft’s share price fits within the corrective scenario we outlined in January. Fundamentally, the company remains strongly positioned within cloud and AI, with solid margins and a dominant market position.
We expect that the current level around $400 may offer opportunities for investors seeking to position themselves for a new upward movement towards $630. Patience remains essential. For more risk-averse investors, it may be considered to enter only upon a further decline towards $338.
Microsoft’s next quarterly results are expected on Wednesday 29 April 2026.
Disclaimer: Investinginvolves risks. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips provided on this website are based on our analysts' own insights and experiences. They are therefore for educational purposes only.