Stifel Cuts Microsoft Target to $400 Citing AI Cloud Capex Pressure
MSFT•Stifel cut Microsoft’s price target to $400, citing rising AI and cloud infrastructure investments that will drive up capital expenditures and depreciation. The firm forecasts fiscal 2027 gross margin of about 63% versus a 66.5% analyst consensus, predicting pressure from higher finance lease obligations and operating expense growth.
1. Price Target Reduction
Stifel lowered its price target for Microsoft to $400, flagging that expanding AI and cloud infrastructure spending will weigh on future profitability. The revision reflects concerns that consensus earnings estimates may understate costs tied to scaling Azure and other AI services.
2. Projected Margin Impact
The firm projects Microsoft’s fiscal 2027 gross margin at roughly 63%, below the 66.5% consensus. This shortfall is attributed to higher capital expenditures, increased depreciation, rising operating expenses and finance lease obligations associated with new data centers and AI deployment.
