By Renato Neves, CFA
Publication Date: 2026-08-10 19:08:00
This article first appeared on GuruFocus.
Bernstein raised its Microsoft (NASDAQ:MSFT) price target to $660 from $647 and kept an Outperform rating. The note pushed back on a worry hanging over the megacap cloud names: that they are overbuilding datacenter capacity ahead of uncertain AI demand. Microsoft shares are up 2.12% intraday.
Bernstein’s argument is that Microsoft has been more disciplined than the fear suggests. The firm said Microsoft has added datacenter square footage more slowly than its cloud revenue has grown, and that while future lease obligations have risen, they are spread across multiple years. Its purchase commitments for power, cooling, and hardware are concentrated in the next 12 months, with little locked in beyond that.
The firm’s key point is that the buildout carries a fallback. Even if AI demand stalled, Bernstein said, Microsoft could redirect the new capacity to its existing CPU-based cloud business, limiting the…
