This Tech Stock Is Being Highly Overlooked in the AI Race

Vandita Jadeja

Mon, August 24, 2026 at 6:30 PM GMT+3 4 min read

Quick Read

MSFT earns a BUY with a $590 price target as Azure crosses $100B in annual revenue and Copilot surpasses 30 million paid seats.
AMZN trades at P/E 36 versus MSFT's 27 despite AWS growing slower than Azure's 43%, making the $590 target look conservative.
Full-year capex hit $116B while free cash flow fell 23%, but net income still grew 31%, making demand normalization the lone bear-case risk.
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Microsoft has become the quiet outlier in the AI trade. While NVIDIA (NASDAQ:NVDA) absorbs the spotlight and hyperscaler rivals chase headlines, Microsoft (NASDAQ:MSFT) is quietly compounding the deepest enterprise AI moat in software.

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Our 24/7 Wall St. price target for Microsoft is $590.17, implying upside of 22.13% from a current price of $483.24. We rate it a buy with high confidence, driven by an Azure business that just crossed $100 billion in annual revenue and a Copilot franchise that has become the fastest-monetizing enterprise product in the company's history.

24/7 Wall St. Price Target Summary

MSFT Price Target — 24/7 Wall St.

Why Microsoft Feels Overlooked Right Now

Microsoft shares are down 3.37% over the past year and roughly flat year to date, even after ripping 24.03% in the last month.

The July earnings report was a statement: revenue of $90.01 billion grew 17.75%, non-GAAP EPS came in at $4.74, and Azure grew 43%. The stock reacted with a 15.51% day-of pop, its strongest earnings reaction in the dataset. Retail sentiment on Reddit has followed, with recent posts on the OpenAI stake driving bullish readings.

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Bull Case: Path to $614 and Beyond

Bulls see Microsoft as the purest scaled beneficiary of enterprise AI adoption. Commercial remaining performance obligations sit at $678 billion, up 84%, a backlog that de-risks near-term revenue. Management guided Q1 FY27 Azure growth to approximately 45% in constant currency, and CFO Amy Hood flagged that "demand continues to exceed available supply."

Copilot has cleared 30 million paid seats, GitHub Copilot revenue accelerated over 60% quarter over quarter, and a new per-seat plus consumption model expands the TAM materially. Our bull scenario points to $614.33, a 27.13% return, on stronger Azure re-rate and Copilot ARPU expansion.

MSFT Price Scenario — 24/7 Wall St.

Bear Case: Capex Digestion Risk

The main risk is the sheer cost of the buildout. Full-year capex hit $115.95 billion, up 79.62%, and free cash flow fell 23.19% in the quarter. Bears argue this compresses returns if AI demand normalizes. All that spend flows straight to the power, cooling, and networking vendors behind the racks (we broke down seven of those suppliers in a free report here: 7 Stocks Powering the AI Boom).

That said, bulls counter that the FCF decline reflects heavy investment in capacity management has repeatedly said is fully monetized in-quarter, and net income still grew 31.33%. Our bear-case target is $507.22, still modestly positive, reflecting the durability of the installed base.

How Microsoft Stacks Up Against Alphabet and Amazon

Alphabet (NASDAQ:GOOGL) is the most direct cloud AI comparable. Google Cloud accelerated to 82% growth in Q2 2026, hitting $24.77 billion, and Alphabet is guiding $175 to $185 billion in 2026 capex. Google Cloud is growing faster, but Azure is much larger at scale, and Microsoft's Copilot attach into Office 365 remains structurally hard to replicate.

Amazon (NASDAQ:AMZN) trades at a P/E of 36, meaningfully richer than Microsoft's 27, despite AWS growing 37% in Q2, a slower rate than Azure's 43%. That valuation gap makes our $590 target look conservative.

MSFT Analyst Ratings — 24/7 Wall St.

Bottom Line: I'd Buy It Here

The 24/7 Wall St. price target of $590.17 and buy rating carry 90% confidence. The tipping factor is the disconnect between Microsoft's growth acceleration and its P/E of 27, cheaper than Amazon on far higher margins.

I'd be a buyer here if Azure sustains 40%-plus growth into FY27. I'd stay on the sidelines if capex intensity keeps free cash flow negative on a YoY basis for another two quarters.

These projections assume Microsoft sustains Azure growth above 30% and Copilot seat expansion continues. Meaningful upside or downside could come from OpenAI's evolving relationship with Microsoft or a broader slowdown in enterprise IT budgets.