Microsoft shares are at a seven-month low. Why do analysts advise buying them?

Microsoft securities ended the session on January 14 down by 2.4%. On that day, they fell in price to $459.38, reaching the lowest level since the end of Ma last year. Since January 2026, Microsoft shares have already lost about 5%. However, despite this, analysts at KeyBanc gave Microsoft's securities an "Above Market" rating and a target price of $630, Barron's wrote. Such an assessment implies their growth by 37% relative to the last closing. The benefit to Microsoft, according to analysts, in 2026 should bring increased spending by businesses on IT products.

Budgets for companies that buy IT products and bundle them with their own services will grow 5.3 percent in 2026, accelerating from 4.6 percent growth in 2025, according to a reseller survey cited by Barron's. This, analysts say, is good news for the entire IT sector and Microsoft products in particular.

"30% of respondents expect customer spending on public clouds to grow faster, [this figure is expected to be] up 17 points from the third quarter - a favorable factor for Azure (Microsoft's cloud computing division. - Oninvest) beyond GPUs," KeyBanc analysts wrote in a note, noting that there is also interest in the market for Microsoft's Copilot AI assistant products. "A growing number of respondents indicate that they are conducting pilot projects with Copilot implementations," KeyBanc noted.

Pressure on Microsoft, as well as shares of software companies and company securities closely related to ChatGPT developer OpenAI, is being exerted by investor skepticism related to the possible formation of a bubble in the AI market, Barron's writes. This comes despite recent statements from Goldman Sachs analysts, who on Jan. 12 reiterated their "buy" recommendation on Microsoft securities and raised their target price for 2026 from $630 to $655 per share, which at the time implied a 37% increase. Microsoft's AI strategy includes investments not only in OpenAI models (a longtime Microsoft partner), but also investments in Anthropic and its own AI models, the analysts pointed out, emphasizing that all of this will allow Microsoft to diversify its portfolio beyond OpenAI.

In the third quarter of last year, Microsoft stock was the worst performing of the "Magnificent Seven" stocks, showing no momentum since the summer of 2025 - after the company reported impressive results and gave a strong forecast for Azure revenue. Overall for 2025, Microsoft stock has added 13.6%. Since July 2025, when Microsoft's capitalization exceeded $4 trillion for the first time in history, the company's stock has lost 17%.

This article was AI-translated and verified by a human editor