A Wall Street analyst at TD Cowen has reaffirmed a positive long-term view on Microsoft (NASDAQ: MSFT) while trimming the stock’s price target ahead of the company’s upcoming quarterly earnings report.
The firm maintained its ‘Buy’ rating on the software giant but reduced its price target to $625 from $655, reflecting a more cautious near-term outlook even as confidence in Microsoft’s artificial intelligence (AI) positioning remains intact. The revised target still implies upside of nearly 40% from Microsoft’s press-time share price of about $452.
The update comes as Microsoft prepares to report its fiscal second-quarter results on January 28. According to TD Cowen analyst Derrick Wood, recent channel checks suggest demand for GPU and CPU infrastructure remains stable to strengthening, supporting expectations that enterprise and cloud customers continue to invest heavily in AI-related workloads.
TD Cowen also highlighted potential upside for Microsoft’s Azure cloud business in the near term. Wood sees scope for roughly two percentage points of improvement versus current estimates for Azure’s constant-currency growth, driven by sustained demand for AI services. However, this upside is expected to be partially offset by capacity constraints, which could limit the pace of growth acceleration over the next few quarters.
Those capacity limitations are likely to keep Microsoft shares range-bound in the near term as investors wait for clearer evidence that infrastructure supply can meet demand. The analyst cited the lack of near-term growth acceleration as a key risk, particularly given elevated expectations around AI monetization.
TD Cowen remains constructive on Microsoft’s longer-term prospects, expecting the company to benefit from the next phase of AI adoption. The firm sees growth potentially reaccelerating in the second half of 2026 as capacity expands and AI workloads scale across Azure and the broader Microsoft ecosystem.
Wall Street bullish on Microsoft stock
More broadly, Wall Street sentiment toward Microsoft remains firmly bullish, with analysts maintaining a strong buy consensus and projecting meaningful upside over the next year.
Based on 34 Wall Street analysts tracked by TipRanks, Microsoft carries a Strong Buy rating, supported by 32 Buy recommendations, two Holds, and no Sell ratings.
Analysts’ 12-month price targets point to an average forecast of $630.32, implying upside of about 39% from the stock’s most recent price of roughly $453. The most optimistic projection places Microsoft shares at $678, while the lowest target stands at $500, still above current levels.
Overall, the outlook suggests expectations for a gradual recovery in momentum over the coming year following a choppy performance over the past 12 months.
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