Microsoft's (MSFT) Capex in FY26 Could Surprise to the Upside, Analysts Say

Microsoft Corporation (NASDAQ:MSFT) is one of the AI Stocks Everyone Is Watching Closely. On July 28,Stifel reiterated the stock as “Buy” and raised its price target to $550 per share from $500 ahead of earnings later this week. The firm mentioned improving enterprise IT spending, booming Azure growth, and robust generative AI demand ahead of the company’s upcoming results.

“We believe healthy results from GCP and NOW last week and our strong checks point to a Q/Q acceleration in the enterprise spending environment.” They added that this, combined with “non-AI GTM execution improvements and robust genAI demand, should enable Azure to post ~100-200bps of upside vs. 34-35% Y/Y-CC guidance.”

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It believes fiscal 2026 capital expenditures may surprise to the upside, and that even though there may be a potential squeeze on gross margins, the outlook on profitability remains positive.

“Looking forward, we believe management’s prior expectation that supply/demand imbalances would linger beyond June will be further pushed out to F2H26, and we also expect FY26 capex commentary could likely exceed our./street estimates of ~$110B/$100B, respectively, echoing Alphabet’s commentary during earnings.”

Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.

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