Microsoft: Best Week Since 2007 — Why the Stock Is Suddenly an AI Darling Again

Microsoft delivered its best weekly performance since 2007: +14% in five trading days. The stock that was still 30% below its all-time high in March is suddenly one of the most coveted names on Wall Street again. See our full Microsoft stock analysis.

What Triggered the Turnaround

Three developments in a single week flipped the narrative.

First: Microsoft brought a new AI data center online. The additional capacity directly addresses the company’s biggest problem — Azure has been capacity-constrained in recent quarters and unable to serve demand. More capacity means more revenue.

Second: A KeyBanc survey of IT executives showed that 85% plan to increase their Azure spending. Simultaneously, adoption of Microsoft’s Copilot AI assistant is rising significantly.

Third: Microsoft took on substantial compute capacity in a Norwegian data center originally earmarked for OpenAI. This strengthens Microsoft’s own AI infrastructure and reduces its dependence on OpenAI.

The Valuation Gets Interesting

After the crash to its low, Microsoft now trades at just 19x forward earnings — cheaper than the average S&P 500 stock. For a company with 17% revenue growth, a dominant cloud position, and the strongest AI platform in enterprise, this is historically cheap.

For context: Microsoft last traded at this valuation level in 2017. Since then, revenue has more than doubled.

The Elephant in the Room: April 29

Microsoft reports Q3 earnings on April 29. The last two earnings reports led to sharp declines — once due to rising capex concerns, once due to OpenAI risk.

Analysts are divided. TD Cowen cut its target from $610 to $540 warning that Azure won’t accelerate near-term. Baird lowered to $500. But the majority — 35 of 38 analysts — rate the stock a Buy.

The key question on April 29: Can management sell Copilot monetization as a growth driver and dispel capex concerns?

For Investors

Buying Microsoft below the S&P 500 average valuation has historically been an excellent trade. For long-term thinkers, this is a rare opportunity. Short-term, caution is warranted — the April 29 earnings will deliver the next major catalyst. Monitor market sentiment with our Fear & Greed Index.