Microsoft (MSFT) likely will benefit from stronger Azure growth and bookings in the second half of 2026, a Microsoft 365 price increase, tighter cost control, and recent AI management changes, Oppenheimer said in a note Monday.
Azure could be a main driver, with its model pointing to about 39.9% fiscal Q3 constant currency growth, which would come in above guidance and could lift the shares, Oppenheimer said.
The company reports fiscal Q3 results April 29.
Microsoft 365 should remain steady, helped by deep customer use, security, integration across products, and the recent price increase, the investment firm said, adding that it also expects bookings to improve later in calendar 2026 as more data center capacity comes online and supports more AI-related demand.
Risks include management concerns about whether AI can generate good returns could restrain capital investments aimed at faster growth, data center limits that could slow growth, and if M365 customers might look to build agents outside the Microsoft platform, Oppenheimer analysts noted.
Oppenheimer reiterated its outperform rating and $515 price target. Fiscal Q3 earnings look favorable with the Azure business showing upside and the company seeing and low expectations after the stock's 13% year-to-date decline and disappointing Q1 earnings, it said.
Price: $422.56, Change: $-2.04, Percent Change: -0.48%