After months of underperformance, Microsoft (NASDAQ: MSFT) has staged a dramatic reversal that is now forcing Wall Street analysts to rapidly revise their outlooks.
Not long ago, Microsoft looked like one of Big Tech’s laggards, with shares down more than 20% for the year heading into its late July earnings report.
The turning point came when Azure posted 43% growth, sending the stock surging 9% in a single session the following day.
That result triggered a wave of upward revisions from major Wall Street firms, including TD Cowen, Mizuho, and Citi, all of which raised their price targets in the aftermath.
UBS made the boldest move of the group, lifting its Microsoft price target from $525 to $675 while maintaining a Buy rating on the stock.
Analyst Karl Kierstead noted that shares had already rallied 39% since the June quarter report and returned 30% over the prior six months, placing the stock near its 52-week high.
UBS made its revised call ahead of Microsoft’s fiscal first-quarter earnings report, which was due October 28, according to Investing.com.
The firm acknowledged the trade is becoming increasingly crowded, describing Microsoft as a “consensus long position” with investors now expecting more from both Azure and Microsoft 365.
Despite those elevated expectations, UBS argued that “the fundamentals support those higher expectations” and maintained that the stock’s valuation at 23 times calendar 2027 earnings “is not stretched.”
On the demand side, Microsoft itself stated that “customer demand for Azure remained higher than available capacity,” pointing to a supply constraint rather than any weakening in appetite.
Microsoft’s commercial backlog surged 84% to $678 billion, a figure that underscores the scale of enterprise commitment flowing into the company’s cloud and AI platforms.
Even when excluding the contribution from OpenAI, that backlog still grew 25%, reflecting broad-based demand that extends well beyond any single partnership.
The combination of surging Azure growth, a record commercial backlog, and improving sentiment around Microsoft 365 Copilot adoption has fundamentally shifted how Wall Street is pricing the stock’s near-term trajectory.
