Microsoft Azure Growth Surges as AI Investments Pay Off

Microsoft's AI investments are paying off in a big way, propelling Azure growth and sending investors scrambling for more. The company's latest quarterly results show revenue up 17% to $90 billion, with adjusted EPS rising over 20%. Azure itself is growing at an incredible 43%, with remaining performance obligations skyrocketing - a clear sign of strong future demand.

Analysts expect first-quarter fiscal 2027 revenue to reach around $90.6 billion, with EPS growth in the mid-teens. Even as Microsoft begins reporting Azure on a pure consumption basis, it has beaten its own Azure guidance for six straight quarters, reinforcing confidence in its cloud momentum.

Wells Fargo's Michael Turrin recently lifted his price target to $725, implying around 41% upside. He forecasts Azure growth near 46%, sees Microsoft as the 'leading enterprise beneficiary' of agentic AI, and expects strong follow-through from its Copilot AI platform as the company moves toward usage-based billing and more aggressive seat discounts.

With a forward P/E around the mid-20s, investors like Gary Alexander argue the stock still offers room for upside as AI-driven demand converts into faster growth. This positioning Microsoft as one of the most compelling large-cap plays in the ongoing AI boom.