Microsoft's Backlog Gives it an Edge Over Nvidia in AI Market

Microsoft has been a key player in the AI market alongside Nvidia, but it has one significant advantage over its competitor - a $678 billion contracted commercial backlog. This backlog translates to recurring revenue, making Microsoft's AI demand more predictable and valuable.

A recent price target from 24/7 Wall St. is $590.43 for Microsoft shares, with an upside of over 22% in the next twelve months. The confidence level on this prediction is high at 90%, assuming Azure, Copilot, and the commercial backlog continue to generate revenue at their current pace.

Microsoft's financial results for fiscal 2026 show a significant increase in revenue, with $331 billion annual revenue up 18% from last year. Azure crossed the $100 billion mark in annual revenue, growing 41%. The company also reported Q4 revenue of $90.01 billion, beating consensus estimates.

Nadella expressed confidence in Microsoft's growth opportunity, stating 'I've never been more confident in Microsoft's opportunity to drive durable long-term growth.' However, there are risks associated with AI demand normalization and regulatory actions that could impact the company's performance.