Microsoft’s Fairwater AI data center has certainly fueled the recent growth and success of Azure software, and is a catalyst for the rise in MSFT stock. Karl Keilstead, an analyst at UBS, said checks with industry partners showed no significant delays in Fairwater’s rollout. The Wisconsin facility began operations in phases last year and is expected to reach 500 megawatts of capacity by mid-2026.
The expected success of these data centers will put Microsoft at the forefront of the AI space in 2026. Compared to its perceived rivals in the technology space, Amazon (AMZN) and Alphabet (GOOGL), Microsoft’s AI efforts are somewhere in the middle. Fortunately, Microsoft’s investment in OpenAI is paying off indirectly, which could boost MSFT. OpenAI predicts losses of $115 billion by 2029. But much of that money will go into data centers like Microsoft’s Azure. As a result, MSFT has been one of the biggest beneficiaries of AI’s continued impact.
Morgan Stanley analysts launched a bullish forecast for Microsoft (MSFT) stock last week based on its favorable software spending plans. Analysts last week classified MSFT as an “overweight” stock and kept their price target unchanged at $650. This forecast suggests a potential upside of nearly 38%. Therefore, the decline at the beginning of the year could be a solid buying opportunity, with investors looking to earn a 38% ROI at the end of the year if they buy MSFT now.
Also read: Intel Rally Ends, INTC Falls 17%, Wall Street’s Q1 Forecasts Miss
Meanwhile, other companies are a little more conservative, despite the solid short-term outlook. UBS lowered Microsoft’s price target from $650 to $600, but maintained its “buy” rating. The company said Azure continues to be its most important growth driver, supported by the accelerated adoption of AI tools in enterprises. But concerns about an AI bubble still appear to be present across Wall Street.
Meanwhile, Wedbush’s Dan Ives called Microsoft a “core winner” in 2026 and argued that Azure could move from pilots to large-scale enterprise deployments as CIO budgets change. Evercore ISI’s Julien Emmanuel added a note of caution, but said systemic risks associated with AI trading remain limited given the healthy hyperscalers’ balance sheets and moderate cross-shareholdings.
