Microsoft (NASDAQ: MSFT) Price Target Raised Amidst AI Growth and Spending

Font: Financial Modeling Prep  • May 06, 2026

• Tigress Financial raised its price target for Microsoft (NASDAQ: MSFT) to $680.00, maintaining a Buy rating, reflecting confidence in the tech giant's growth trajectory.
• The company reported strong third-quarter revenue growth of 18% year-over-year to $82.90 billion, driven by significant AI momentum and a 29% surge in Microsoft Cloud revenues to $54.50 billion.
• Despite a 49% increase in capital expenditures impacting gross margin and clean power goals, diluted earnings per share (EPS) still rose by 23% to $4.27, indicating continued shareholder profitability.

On May 6, 2026, Tigress Financial raised its price target for Microsoft (NASDAQ: MSFT) to $680.00, maintaining its Buy rating when the stock was at $413.96. Microsoft is a technology giant with a market capitalization of approximately $3.08 trillion, known for its software, cloud computing, and significant investments in artificial intelligence.

The firm’s positive view is supported by Microsoft's strong growth. In its third-quarter report, Microsoft announced revenues jumped 18% year-over-year to $82.90 billion. This was propelled by strong AI momentum and a 29% surge in Microsoft Cloud revenues, which reached $54.50 billion.

However, the company faces significant costs associated with its expansion. Capital expenditures, which are funds used to upgrade physical assets like data centers, increased by 49%. This heavy spending has pushed the company's gross margin, or the profit made on its products, to its lowest level since 2022.

This spending is directly tied to its AI ambitions. As highlighted by Bloomberg, the rapid buildout of AI data centers is so energy-intensive that it is reportedly colliding with the company's clean power goals. This has contributed to the stock's performance, which is down 17.20% over the past six months.

Despite these challenges, some analysts see potential. An analysis by Zacks Investment Research considers Microsoft a strong growth stock. The company's diluted earnings per share also rose by 23% to $4.27 in the third quarter, showing that profits for shareholders are still growing despite the increased spending.