Microsoft has played a leading role in the global technology sector for decades and is known to a huge audience. In May 2025, we dedicated an article to this company, and today we look back at the findings, highlight the developments, and once again set the vision and strategy for the coming months for you as an investor.
We heartily recommend that you read the May 15, 2025, article "Microsoft: on to price target USD 550" first. That way you will be fully aware of the background. The article can be found HERE.
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What are the developments at Microsoft since May 2025?
Microsoft continues to do a lot to uphold its image as a socially engaged company. The company therefore announced in early January 2026 a major plan to reduce the environmental and economic impact of its AI data centers in the US.
Among other things, the company promises to pay higher power prices itself so that local electricity bills do not increase, to more than offset water consumption and to report more transparently on consumption. This approach is noble, of course, but primarily intended to reduce local resistance to large data center projects and increase community involvement.
On the product development front, updates around Copilot and Microsoft 365 were rolled out: improved AI functionality within Office apps, a new "Agent Store" in Microsoft 365 Copilot where digital AI assistants can be found and used, and better Chat experiences with visual input and linked context, such as calendar and files.
Microsoft reported record revenue of about $281.7 billion in fiscal 2025 (as of June 30), up about 15% from 2024. Operating profit rose about 17% to about $128.5 billion and net income was about $101.8 billion, up about 16% year over year. These figures include all segments of the company and show that the core business is growing broadly.
The results were above analysts' expectations. For 2026, expectations are for continued double-digit growth in revenue and profit, particularly due to further adoption of AI tools, cloud services and business Microsoft 365 licenses.
Currently, Microsoft employs about 228,000 people and its market capitalization is about $340 billion. In comparison to other tech giants, it is lower than Apple ($375 billion) and Alphabet (Google), which is valued at about $400 billion.
How is Microsoft evolving in the global AI race?
Microsoft no longer sees AI as an ancillary technology but as a core strategy for growth and differentiation. The company has identified several key trends that will shape the 2026 AI landscape, including the transition from AI as a question-answering tool to AI as a collaborative partner that helps people be creative and productive.
Microsoft continues to expand AI in all of its software portfolio, such as Microsoft 365 Copilot, integrated into Office, Windows and Edge, with new features. There is also expansion in Copilot Studio and AI platforms for developers that enable AI integration and customization within business applications. These products are part of Microsoft's strategy to make AI widely accessible and applicable in business and consumer environments.
Microsoft indicated in 2025 that it will invest hundreds of billions of dollars in data centers and AI services, essential for training and scalability of AI models. Microsoft continues to partner with key AI players such as OpenAI.
Despite intense competition from Alphabet/Google in particular, Microsoft is well-positioned in the AI race.
What is the view of analysts' on Microsoft's stock price?
Here we see a dichotomy. Technical analysts have the stock predominantly on SELL, but fundamental analysts have the stock on STRONG BUY, with a 12-month price target averaging $629.
Azure cloud services and AI integration (such as Copilot and enterprise AI solutions) are seen as key growth drivers that could support revenue and earnings in the coming quarters.
What is Yelza's view on Microsoft's stock price?
Below is Microsoft's stock price chart as of early 2023. At a glance, the arrows represent the most likely scenario.
In the May 11, 2025, article, our algorithm gave a 12-month price target of $550. This was reached exactly within three months. At the time, this level signaled the beginning of a larger correction in our system and so it happened. Microsoft is currently still in the midst of a longer correction that could push the price back to around $400 over the next six months. This level, according to the most likely scenario, will mark the end of the correction and the beginning of the next upward move. The price target of $630 is equal to the consensus among analysts.
Thus, we go all the way with the combination of the technical and fundamental analysts. Microsoft's share price may first fall about 15% before rising about 60%.
Conclusion:
The previous price target has been reached, so we assume that your portfolio no longer has a position in Microsoft. For the moment, we give you the consideration to be patient with buying the stock for a while longer. From the current level of around $460, the price can still return to the $400 level in the transition phase. In the fall, towards the $400, you can consider building up the position for the next ride up towards the $630.
If the price does not fall away after all but closes above the $560 from the current $460, then you can consider taking a modest position towards the $630.
Wednesday, January 28, 2026, Microsoft will come out with the figures for the second quarter of the fiscal year 2025-2026 after trading hours.
Disclaimer: Investing involves risk. 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.