Overview
- Citing a July 18 research note, Bank of America reaffirmed a Buy rating on Microsoft and set a $500 price target before the company’s July 29 fiscal fourth‑quarter report.
- Microsoft guided Azure revenue growth of 39%–40% year over year for the quarter and BofA says meeting or beating that range is the single most important near‑term test for the stock.
- The company reported a $627 billion remaining performance‑obligations backlog at the end of Q3 and expects roughly 25% of that backlog to convert to revenue in the next 12 months as capacity expands.
- Operational signs of capacity relief include the first Fairwater data center in Wisconsin going fully operational, and Copilot now has about 20 million paid seats with AI annual recurring revenue near $37 billion.
- Heavy infrastructure spending is squeezing free cash flow with Microsoft guiding roughly $190 billion in calendar‑2026 capex and sell‑side estimates of about $42 billion for fiscal Q4, so investors will watch July 29 commentary on fiscal‑2027 margins to judge returns.