24/7 Wall St. puts $613.43 target on Microsoft, sees 22.85% upside

Microsoft's own numbers set up the call. Fiscal Q4 2026 revenue hit $90.01 billion, up 17.8% year over year, non-GAAP EPS of $4.74 beat estimates by 11.81%, and Azure crossed $100 billion in full-year revenue for the first time. A previously skeptical CNBC analyst said this week that Microsoft has "clearly turned the corner" on monetizing its buildout.

The bull case leans heavily on the backlog. Commercial remaining performance obligations surged 84% year over year to $678 billion, which the firm frames as multi-year revenue visibility few software companies can match. Azure grew 43%, Microsoft 365 Copilot passed 30 million paid seats, and CFO Amy Hood told investors that "demand continues to exceed available supply" for Azure capacity.

The bear case starts with capex. Full-year FY26 capital expenditures ballooned to $115.95 billion, dragging free cash flow down 6.46% despite record earnings, and OpenAI-related investment losses widened to $3.1 billion in Q1 FY26. Hood's counter is that GPU-heavy capex is "short-lived assets" that can be throttled if demand softens. The near-term test is whether Azure can keep its mid-40s growth pace and convert that backlog, and whether Alphabet's cheaper multiple and faster cloud growth pull investor money away.