Microsoft shares declined slightly after the latest earnings release, even though the company exceeded expectations on both revenue and profit. The market reaction was driven by a notable 74% increase in capital expenditures year-over-year. A large portion of these investments is directed toward expanding AI infrastructure and Azure cloud capacity.

Analysts consider this correction a buying opportunity. Morgan Stanley noted that the strong demand for cloud services and the potential for margin expansion remain underappreciated. In their view, Microsoft maintains solid long-term positioning, and the pullback may represent an attractive entry point.

The company’s results for the first quarter of fiscal 2026 exceeded forecasts. Revenue rose 18.4% to $77.7 billion, while Azure posted 39% growth in constant currency. Other business segments, including Office, LinkedIn, and Windows, also demonstrated stable performance.

Most analysts maintain a bullish outlook on Microsoft stock. Out of 48 experts, 46 recommend buying the shares, and the average price target suggests upside potential of around 27%. With AI development and strong enterprise demand, the recent decline is seen as temporary.