Microsoft (MSFT) shares rose 1.8% to $402.70 on July 16, extending Wednesday’s 2.8% gain. Over two days, the cumulative increase reached 4.6%, adding about $132 billion based on the latest market cap. In Microsoft’s third fiscal quarter, Azure revenue grew 40%, and annualized AI revenue exceeded $37 billion (up 123% year over year).
Nasdaq closes weaker as Microsoft climbs against the trend, up 1.8%
Microsoft shares rose 1.8% to $402.70 during Thursday afternoon trading. The stock moved higher against the Nasdaq’s roughly 1% decline, driven by a selloff in chip stocks. From Tuesday’s close to Thursday, MSFT’s two-day cumulative gain was 4.6%, adding about $132 billion based on the latest market cap.
This divergence in price action occurred on the same trading day when semiconductor stocks saw a sharp drop. Market watchers said the price movement suggests traders are treating corporate AI revenue and chip-cycle risks differently.
Citigroup: Target price for Microsoft cut to $570
On Wednesday, four brokerages adjusted their price targets for Microsoft, resulting in the following: three lowered their targets but maintained positive ratings, while one raised its target. After adjustments, the four targets ranged from $490 to $625, implying upside of 22% to 55% versus Thursday’s quotes.
Citigroup analyst Tyler Radke cut the target price from $620 to $570, saying in a report by Barron’s that as customers optimize AI token spending, Microsoft’s “strategic position is becoming increasingly solid.” Microsoft’s P/E is 24.0x, about 18.7% lower than the peer averages of 28.4x for Alphabet (GOOGL) and 30.6x for Amazon (AMZN). Microsoft CFO Amy Hood said the company remains “confident in the returns on these investments.”
Q3 AI business data: Azure grows 40% and annualized AI revenue exceeds $37 billion
Key figures for Microsoft’s AI-related business in the third fiscal quarter are as follows:
· Azure revenue grew 40% (39% on a constant-currency basis, matching management’s prior guidance range of 39% to 40%)
· Annualized AI revenue exceeded $37 billion, up 123% year over year
· Paid-tier Microsoft 365 Copilot seats surpassed 20 million
Capex pressure: $31.9 billion in Q3, management guidance of over $40 billion in Q4
Microsoft’s capital expenditures in the third fiscal quarter totaled $31.9 billion, about twice the $15.8 billion in free cash flow in the same quarter. Management expects fourth-quarter capital expenditures to be over $40 billion. The company’s full-year 2026 capital expenditure plan is about $190 billion, including an incremental $25 billion driven by higher parts prices.
CFO Amy Hood said Microsoft remains “confident in the returns on these investments.” The fourth fiscal quarter earnings report, to be released on July 29, will be the market’s first chance to assess whether AI revenue growth can offset the impact of capex intensity.
FAQ
How does Microsoft (MSFT) P/E compare with major peers?
As of 2:04 p.m. ET on July 16, 2026, Microsoft’s P/E is 24.0x; Alphabet (GOOGL) is 28.4x; Amazon (AMZN) is 30.6x. Microsoft’s P/E is about 18.7% lower than the average P/E of the two main cloud peers.
How did Citigroup analyst Tyler Radke adjust Microsoft’s price target?
Citigroup analyst Tyler Radke on Wednesday before July 16, 2026, cut Microsoft’s price target from $620 to $570 while maintaining a positive rating, and said in the cited report that Microsoft’s “strategic position is becoming increasingly solid.”
What are Microsoft’s fourth fiscal quarter capital expenditure guidance and earnings release date?
Management guided that fourth-quarter capital expenditures will be over $40 billion, and that the company’s full-year 2026 capital expenditure plan is about $190 billion (including an incremental $25 billion from higher parts prices); Microsoft’s fourth fiscal quarter earnings report is scheduled to be released on July 29, 2026.
