24/7 Wall St.'s $640.92 Microsoft Target Rests on Verified FY2026 Q4 Results
The forecast is written by Vandita Jadeja. It uses a share price of $498.51 and says the stock is down 2.3% over the past year while trading at about 27 times earnings. From there it projects 28.7% upside, with a "confidence level" of 90%. It also gives a bull case of $737.80 and a bear case of $542.75, plus a year-by-year table that reaches $957 in 2030. All of these come from the publisher's own model. Microsoft disclosed none of them, and the page itself carries sponsored retirement-guide ads. Treat it as a stock-picker's argument, not a news event.
The earnings figures it relies on are accurate. For the quarter ended June 30, 2026, Microsoft reported fourth-quarter revenue of $90 billion, up 18% from a year earlier, and said Azure cloud revenue surpassed $100 billion for the first time in fiscal year 2026. Against analyst expectations, CNBC reported $4.74 adjusted earnings per share versus $4.24 expected, and revenue of $90.01 billion versus $87.62 billion expected. For the full year, Microsoft reported $331.8 billion in revenue (up 18%), $155.2 billion in operating income (up 21%), and $214.4 billion in Microsoft Cloud revenue (up 27%).
The $4.74 figure needs context the forecast leaves out. Microsoft's non-GAAP numbers strip out gains and losses from its OpenAI investment, which is why GAAP earnings came in higher at $4.81 per share. The quarter also got help from one-off items. Several discrete items produced a benefit of $0.27 on diluted earnings per share compared with April guidance, including a $3.2 billion gain from Microsoft's investment in Anthropic and lower-than-expected Voluntary Retirement Program expenses, partially offset by severance expense and impairment charges in XBOX. Microsoft says it beat expectations even after adjusting for those items. The size of the headline beat still owes something to accounting.
Azure growth is the point where the bull case turns into a real trend. Azure growth accelerated to 43% compared with 40% in the prior quarter, while analysts had been looking for about 40%. For the current quarter, CFO Amy Hood projected 45% Azure growth at constant currency for the fiscal first quarter, above StreetAccount's 41.4% consensus. Microsoft forecast total first-quarter revenue of $89.85 billion to $90.95 billion.
Investors did react. CNBC reported that shares moved 8% higher in extended trading the night of the release, and Tickeron puts the next-day gain at about 17%. The 24/7 Wall St. pitch is that the stock has since given back enough to be cheap again. Its share price, P/E ratios and one-year return are market data that change daily.
Microsoft's $678 Billion RPO Backlog Leans on OpenAI More Than the Headline Shows
The bull case rests on commercial remaining performance obligations (RPO). RPO is revenue customers have signed contracts for but Microsoft has not yet delivered or recognised. It rose 84% to $678 billion, and the part scheduled beyond the next 12 months grew 112%. The forecast reads this as "multi-year visibility," and the figure does measure demand that is already contracted.
The call added details the forecast omits. Excluding OpenAI, RPO grew 25%, so the jump from 25% to 84% is mostly OpenAI's commitments. The backlog has a weighted-average duration of 2.3 years, and Microsoft expects about 30% of it to become revenue in the next 12 months. On those figures, about $200 billion is expected to be recognised over the coming year. The rest is spread across later years.
Management also addressed the concentration risk directly. Microsoft said nearly 90% of full-year Microsoft Cloud revenue came from customers other than frontier-model companies, and all of the quarter-over-quarter RPO growth came from customers outside that group. The Microsoft Cloud revenue base looks broadly diversified. The eye-catching backlog total depends much more on one AI lab.
The forecast names "OpenAI partnership economics" as a risk only in its last paragraph. On Microsoft's own figures, that relationship explains most of the gap between 25% and 84% backlog growth.
Microsoft's 2026 and FY2027 Capex Figures Differ Across Reports
Capex, or capital expenditure, is the money Microsoft spends on data centres, servers and chips. 24/7 Wall St. calls it "the pressure point," and Microsoft's disclosures back that up. In Q4, Microsoft's capex spending was $41 billion, which included spending on datacenters and their increasingly expensive components; two-thirds of the outlay was for "short-lived" assets, primarily CPUs and GPUs. Cash from operations was $55.4 billion, and free cash flow (the cash left after that spending) was $19.6 billion for the quarter. Microsoft said the higher spending held back free cash flow.
The $175 billion figure is where the reports disagree. 24/7 Wall St. describes about $175 billion as Microsoft's FY2027 capex guidance, and says it will be watching whether spending "creeps above $200 billion." The earnings-call summaries attach the number to a different period. In the call's Q&A, Hood said that effective FY27 Microsoft is extending the useful life of data centers and office buildings from 15 to 25 years; the change only affects the timing of depreciation, with a minimal benefit to FY27 operating income, but more future data center leases will shift from finance leases (included in CapEx) to operating leases (not included), adjusting the calendar year 2026 CapEx expectation to approximately $175 billion, though underlying investment plans remain unchanged. Yahoo Finance, citing The Wall Street Journal, reported the same revision to approximately $175 billion from about $190 billion.
A third report points the other way. Value Add Pulse put FY2027 capex at $255–260 billion. That figure appears in none of the other reporting reviewed here.
Two conclusions hold regardless of which period the $175 billion covers. First, part of the reduction comes from reclassifying leases, not from building less. Microsoft says its investment plans have not changed, so comparing the new figure with older capex totals understates actual spending. Second, spending is still rising. Microsoft guided fiscal Q1 capex above $50 billion, including the lease-reclassification impact. According to both CNBC and Yahoo Finance, Hood said Microsoft expects to remain free cash flow positive in fiscal year 2027. Management also expects full-year operating margins to slip by less than one percentage point. Gross margin was 67% in Q4, down from a year earlier as the sales mix moved toward Azure and AI infrastructure.
For Azure customers, the practical point is the capacity shortage. Microsoft said it remains focused on delivering efficiencies that help bridge the gaps as customer demand continues to exceed supply, and it warned that year-over-year Azure growth rates can vary quarter-to-quarter based on capacity timing and contract mix. On the call, Nadella said Microsoft added 31 data centres this quarter and 88 over the year, and cut the time to bring new GPUs online in its largest regions by nearly 50%. Microsoft says demand exceeds supply, but it has not published how far behind it is.
Copilot, GitHub and Dynamics 365 Move From Per-Seat to Consumption Billing
24/7 Wall St.'s bull case assumes that "Copilot monetization shifts meaningfully to consumption pricing." That shift is already under way. IT buyers will feel it directly.
Nadella said on the call that Microsoft is moving its business model from per-seat licences to "per-seat-plus-consumption," meaning a seat licence plus charges based on how much is used. The call gave these examples:
- Cowork, the Microsoft 365 Copilot feature for multi-step tasks grounded in a customer's work data, became generally available last month, and usage-based billing was added this month.
- GitHub Copilot added usage-based billing this quarter. Microsoft says Business and Enterprise seats kept growing and consumption revenue was significant after the new model took effect.
- Dynamics 365 is also moving to seats plus consumption, and usage-based credit consumption in customer service rose 4X quarter over quarter.
- Project Perception, a multi-agent security system now in private preview, is expected to be sold on a consumption basis.
The figures 24/7 Wall St. cites for this part of the business all match the call transcript. GitHub Copilot has 50 million users, and Nadella said Copilot revenue accelerated over 60% quarter-over-quarter. Foundry, Microsoft's app and agent platform on Azure, has 100,000 customers and more than doubled its revenue year over year. Agent 365, the control plane that applies a company's existing identity, security and management policies to AI agents, had nearly 40 million agents registered within two months.
Microsoft 365 Copilot passed 30 million paid seats, and Microsoft says net seat additions more than doubled from the previous quarter. Nadella also highlighted the new E7 suite, which bundles Copilot, E5, Entra and Agent 365. He said hundreds of enterprise customers bought millions of E7 seats within two months of launch, and EY rolled it out to 400,000 employees.
For investors, consumption billing makes growth potential unlimited. For licensing teams, it means Copilot costs will vary month to month with usage instead of being fixed per seat. Microsoft did not give rates or caps on the call.
Windows OEM and Xbox Revenue Declines Weigh on Microsoft's Growth Story
The forecast mentions the weak spots in one line: More Personal Computing revenue fell 4% and Xbox fell 10%. The detail matters more to this audience. Windows OEM and Devices revenue, which comes mainly from licences sold with new PCs, fell 7%. Management blamed weaker PC demand and a tough comparison with the previous year, which was lifted by Windows 10 end of support.
The outlook for the current year is worse. For FY2027, Microsoft expects Windows OEM and Devices revenue to fall in the high teens, citing PC demand, higher component costs and elevated inventory. That is Microsoft's own forecast of a slow year for new PC sales. On the product side, Nadella said Microsoft is investing in Windows "quality and fundamentals" and positioning it for on-device AI. He described Windows as a potential "offload for unmetered intelligence," meaning AI work that runs on the PC instead of being billed as cloud usage.
Xbox is in restructuring. The quarter included severance and impairment charges at Xbox. Nadella said Microsoft is "making the necessary decisions" across content, platform and operations, and expects to return the business to growth in fiscal 2027.
Elsewhere in the segment, search advertising revenue excluding traffic acquisition costs grew 10%, and Nadella said Bing and Edge have gained share for five straight years. Microsoft also expects on-premises server revenue to fall by low to mid-single digits this quarter as customers keep moving to the cloud. That is relevant for organisations still buying Windows Server and SQL Server licences.
24/7 Wall St. also compares Microsoft's valuation with rivals. It says Google Cloud grew 82% and AWS grew 37% in their latest quarters, and it lists P/E ratios of 16 for Alphabet and 35 for Amazon. None of the independent reporting reviewed here confirms those peer figures. CNBC does confirm the size ranking: at $100 billion, the business trails Amazon Web Services while remaining larger than Alphabet's Google Cloud.
What this means for you
Microsoft's results should matter more to your licensing and capacity planning than to your brokerage account. The price target is one publisher's model. The billing changes and supply constraints are Microsoft's own disclosures, and they affect budgets now.
- Budget for Microsoft 365 Copilot, GitHub Copilot and Dynamics 365 as seat costs plus usage charges, since Microsoft has added usage-based billing to Cowork and GitHub Copilot and credit-based consumption to Dynamics 365 customer service.
- If you are evaluating E7, know that it bundles Copilot, E5, Entra and Agent 365, and that Microsoft is actively selling it to large enterprises as an "all-in" AI suite.
- Plan Azure deployments around limited capacity, since Microsoft says demand still exceeds supply and growth will vary quarter to quarter with capacity timing.
- Expect a soft PC market in FY2027, since Microsoft itself forecasts Windows OEM and Devices revenue down in the high teens because of weak demand, higher component costs and high inventory.
- Read the $678 billion backlog in context: excluding OpenAI it grew 25%, and only about 30% is expected to become revenue within 12 months.
- Treat the $640.92 target, the 90% confidence figure and the 2030 price table as one publisher's opinion, not a Microsoft forecast or independent analysis.
Microsoft's fiscal first quarter ends September 30. That report will show whether Azure reaches the promised 45%, whether capex stays above $50 billion as guided, and whether the lease reclassification makes it harder to compare capex over time. Whatever happens to the share price, the change IT departments will notice first is already in place: Copilot and GitHub Copilot costs now depend on usage as well as seat counts.
Update: Additional details (September 24, 2026)
24/7 Wall St. puts Microsoft’s FY2026 capital expenditures at $115.95 billion, up 79.62% year over year, and says full-year free cash flow declined 6.46%.
The publisher also frames its $175 billion figure as FY2027 guidance, despite Microsoft’s earnings-call clarification that the comparable estimate relates to calendar-year 2026 after lease-accounting changes.