Microsoft has lost nearly a quarter of its value since the start of 2026, falling from above $517 in October 2025 to around $370 as of the end of March. That kind of drawdown in a company of Microsoft’s scale — $38.46 billion in net income last quarter, revenues up 17 percent year over year, Azure growing 39 percent — is unusual enough that it demands explanation.
The answer, most analysts agree, is that investors have grown anxious about the sheer scale of the company’s artificial intelligence capital expenditure commitments, and that anxiety has been compounded by the broader market volatility driven by the US-Iran war and its inflationary effects.
Into that environment, Benchmark Research analyst Yi Fu Lee initiated coverage on April 1 with a Buy rating and a $450 price target — a number that already implies roughly 22 percent upside from recent levels. Lee’s framing of the thesis is distinctive: he describes Microsoft as the technology industry’s “true landlord,” arguing that the company sits on an ecosystem of enterprise and consumer data — one billion Windows users, 300 million Office seats, LinkedIn, GitHub, Azure, Teams — that no competitor can replicate.
That data advantage, he argues, is the foundation of Microsoft’s AI monetisation capability, and the market has mispriced it by treating capex growth as a liability rather than an investment in a structural moat.
The capex concern is not imaginary. Microsoft has committed to billions in AI infrastructure spending, including a $5.5 billion Singapore AI investment through 2029 and reported negotiations for a $7 billion natural gas power plant dedicated to data centre capacity. The company’s capital expenditure guidance has repeatedly surprised analysts on the high side, and questions about the return timeline on that spending have driven the valuation compression.
Benchmark’s counterargument — that the spending reflects contracted demand rather than speculative overbuilding — finds support in the company’s commercial remaining performance obligations, which jumped 110 percent year over year to $625 billion, a figure that represents locked-in future revenue across cloud and AI products.
The broader analyst consensus aligns with the bullish case, if not with Benchmark’s specific target. Among 54 analysts covering the stock, 51 rate it Buy or Strong Buy, with a mean price target of around $589.
Goldman Sachs, which initiated at Buy in January with a $655 target, described Microsoft as having “discovery value” in AI and projected the company could reach $35 in earnings per share by 2030. Piper Sandler reiterated an Overweight rating with a $600 target as recently as March 31.
The forward price-to-earnings ratio has compressed to approximately 33 times — the lowest it has been in years relative to the company’s underlying growth trajectory, and meaningfully below the 40-plus multiples carried by some of its technology peers.
Whether that compression resolves through a stock price recovery or through earnings disappointment will depend heavily on whether the Iran conflict’s inflationary effects stabilise before Microsoft reports its next quarterly figures. That report is expected on or around April 28, and it will carry more interpretive weight than usual given the uncertainty of the past several weeks.
