Why Stifel Just Revamped Its Price Target for Microsoft Stock

Microsoft plans to expand its data center capacity to 38 gigawatts by 2032, up from 12 gigawatts, with a third dedicated to AI-specific chips. The company expects $175 billion in capital expenditures for 2026. Microsoft did not comment on the report. According to Bloomberg, tech firms are investing heavily in data centers to support AI services.

Microsoft reported Q4 revenue of $90B (+18% YOY) and EPS of $4.74 (+23% YOY), beating estimates. Azure cloud revenue grew 43% YOY, while the More Personal Computing division declined 4%. The company plans significant AI infrastructure investments, with capex expected to exceed $50B in Q1 2027. Analysts rate MSFT a 'Strong Buy' with an average price target of $559.76.

Google announced a €13 billion ($15.1 billion) investment in AI infrastructure in Finland, marking its largest investment in Europe. The funds will support data centers and energy projects, with Google citing Finland's leadership in AI and sustainability. Microsoft and TikTok have also committed significant investments in the country, with Microsoft planning data center development and TikTok investing €1 billion in a new facility. Finland's Prime Minister highlighted the country's attractivenes

Microsoft and Japan's National Police Agency formalized a partnership to combat cybercrime, granting law enforcement structured access to Microsoft's threat intelligence. The agreement, effective until 2027, aims to prevent cyberattacks and support investigations, with Microsoft sharing data on malicious domains and URLs. This collaboration aligns with Japan's upcoming Active Cyber Defense Law and follows Microsoft's $10 billion investment pledge in Japan.

Alphabet's Google Cloud reported 82% revenue growth and 212% operating income growth year-over-year. Market data shows Google Cloud gained 2% market share, primarily from AWS. AWS and Azure also grew, with 37% and 43% revenue increases respectively. All three companies are investing heavily in AI infrastructure, with investors reacting to their spending and earnings reports.

Microsoft (MSFT) and Alphabet (GOOGL) reported strong AI-driven quarters, with Azure surpassing $100B and Google Cloud growing 82%. MSFT posted $90.01B revenue, up 17.8%, while GOOGL reported $119.80B revenue, up 24.2%. MSFT has strong cash flow and low rate sensitivity; GOOGL has negative free cash flow and increased debt. Analysts debate their valuations amid rising Treasury yields.