Microsoft (MSFT) Stock in Deep Slump — Analysts See 55%+ Upside

Microsoft (MSFT) stock has dropped nearly 32% from its October 2025 peak, marking its worst six-month run since 2009. The pullback has been driven by profit-taking after a strong rally, broader weakness in the tech sector, and rising concerns over heavy AI-related spending. Despite this downturn, Wall Street remains bullish. 33 out of 36 Wall Street analysts rate MSFT stock as a Buy, with an average 12-month price target of $583.68, suggesting around 58% upside from current levels.

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What’s Happening with MSFT Stock?

Year-to-date, MSFT stock is down by around 23%, making it the weakest performer among the Magnificent Seven. Since its October 2025 peak, Microsoft has lost a lot of its market value and now ranks as the fourth-largest U.S. company by market capitalization, behind Nvidia (NVDA), Apple (AAPL), and Alphabet (GOOGL).

The decline has been steep. The stock is on track for its biggest quarterly fall since late 2008, its worst start to a year on record, and its longest losing streak since early 2009, marking a series of negative milestones.

MSFT Valuation Turns Attractive

The recent selloff has pushed Microsoft’s valuation to levels not seen in years, with its price-to-earnings (P/E) ratio near a decade low. MSFT’s forward P/E ratio is at 21.57, below the sector average of 29.0.

While there’s debate over whether it deserves that premium, many analysts believe the current discount is excessive given the company’s strong fundamentals. Notably, Microsoft’s growth remains solid. In Q2 FY26, the company’s revenue rose 17% year-over-year, and Wall Street expects around 16% growth in the coming quarter and for the full year.

Analysts Stay Bullish

Earlier this week, Bank of America’s five-star-rated analyst Tal Liani reaffirmed a Buy rating on MSFT with a $500 price target, implying about 35% upside. He believes Microsoft is at the center of the AI boom and well-positioned to benefit from AI monetization across its cloud and software businesses.

While rising capital spending could pressure margins, he expects Microsoft to maintain strong profitability, with operating margins staying above 46%.

Likewise, Citi’s analyst Tyler Radke reiterated his Buy rating on MSFT at a price target of $635, predicting an upside of over 70%. Radke highlighted strong momentum in Microsoft’s AI offerings and continued growth in its cloud business. He noted that Copilot is emerging as a key growth driver for the company’s commercial software segment, with adoption accelerating rapidly and potentially exceeding past growth trends.

Is Microsoft a Good Stock to Buy Now?

According to TipRanks, MSFT stock has received a Strong Buy consensus rating, with 33 Buys and three Holds assigned in the last three months. The average Microsoft stock price target is $583.68, suggesting a potential upside of 58.4% from the current level.

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