Microsoft (MSFT -0.51%) has quickly emerged as a leading player in the generative AI race through internal investments in its products and services and billions of dollars in investments in ChatGPT creator OpenAI.
The emergence of Chinese startup DeepSeek has raised fears of AI distillation, negatively impacting Mag 7 stocks including Microsoft and Amazon. The downside may represent an opportunity due to the way the software giant owns and controls the AI stack through its substantial investment in OpenAI. Moreover, by integrating AI across its product line, margins can be improved further.
Recently, Zacks.com users have been paying close attention to Microsoft (MSFT). This makes it worthwhile to examine what the stock has in store.
Although the Magnificent 7 tech stocks have been the primary drivers for the bullish S&P 500 run over the past few years, they do not trade uniformly and in tandem.
Artificial intelligence will bring major upheaval to wealth management, a Microsoft executive said, as the technology's potential to process information vastly reduces the hurdles required to compete with established banks.
For almost the entirety of Microsoft's existence, the company spent far more on R&D than CAPEX. MSFT, like others in the Mag 7, is making a pronounced "cross over" from spending on immediately deductible items under operating expenses and moving those to capitalized expenses. While Open AI is independent, it vicariously functions through Microsoft at this moment in time. Microsoft is more and more being associated with Open AI's ChatGPT.
Despite the tariff and DeepSeek turmoil, the U.S. stock market has been going strong in 2025, with the benchmark S&P 500 index recording a 3.13% rise in the year-to-date (YTD) chart.
One of the most active members of buying and selling stocks in recent years has been U.S. Rep. Josh Gottheimer (D-N.J.
Microsoft shares dropped 7% post-Q2 FY25 earnings due to disappointing non-AI Azure growth, highlighting AI's critical role in Microsoft's growth narrative. Despite double-digit growth in revenues and operating income, non-AI Azure growth lagged, impacting overall investor sentiment. Microsoft's stock isn't cheap but has a potential upside, with a price target of $421 for FY26 and $495.55 for FY27.
Microsoft Corporation stock delivered a strong Q2 FY25 earnings report. But stock prices face downward pressure due to various uncertainties, with the ongoing U.S.-China trade disputes as a top factor. The implied volatilities for MSFT stock options are reasonable and likely underestimate the magnitude of these uncertainties.
Anduril Industries, Palmer Luckey's defense-tech startup, will take over Microsoft's multibillion-dollar augmented reality headset program with the U.S. Army, the companies said. The partnership will give the drone software maker "oversight of production, future development of hardware and software, and delivery timelines" if approved by the Department of Defense.
Microsoft has added another 389 megawatts of renewable power to its portfolio as the tech giant scrambles to meet the power demands required to match its AI ambitions.