MSFT underperformed in 2025 with a 7% decline, while Azure revenue surged 43% and commercial backlog hit $678 billion.
Microsoft shares have fallen 7% this year, trailing peers like Alphabet and Amazon, despite Azure’s 43% growth and a $678 billion commercial backlog. The stock’s 30% peak-to-trough drop stemmed from AI capex concerns, though fundamentals remain strong.
Wall Street’s consensus 12-month price target for MSFT stands at $555.77, implying 23% upside from its current $451.10. Arete Research’s bullish $870 target reflects optimism about Azure AI, Copilot monetization, and OpenAI leverage. Azure now generates $100 billion in annual revenue, while Microsoft 365 Copilot surpasses 30 million paid seats.
Free cash flow declined 6.46% to $66.99 billion for the fiscal year, even as revenue rose 17.79% to $331.84 billion. The stock rebounded after earnings but remains negative for 2025 after a 30% drawdown from its October 2025 high of $517.85.