Trump-NATO Framework Deal Eases European Tariff Fears, Boosts Markets
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 22 2026
0mins
Should l Buy MSFT?
Source: stocktwits
- Market Response: The Trump-NATO framework deal effectively alleviates fears of February 1 tariffs on European nations, leading to a positive market reaction with S&P 500 futures up 0.2% and Nasdaq 100 futures up 0.3% in early Thursday trading.
- Economic Data Focus: Investors are set to closely monitor upcoming GDP, weekly jobless claims, and the PCE inflation report, as these indicators will serve as key catalysts for the Fed's next moves, potentially influencing market sentiment and stock performance.
- Stock Movements: Intel (INTC) shares hit their highest level since January 2022, while Microsoft (MSFT) secured a $170.44 million Air Force contract, highlighting strong performance in the tech sector.
- Investor Sentiment Shift: Despite the retail sentiment towards the SPDR S&P 500 ETF (SPY) remaining 'extremely bearish', there has been a moderation in sentiment towards the Invesco QQQ Trust (QQQ), indicating subtle shifts in market psychology as the rally unfolds.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for MSFT is 631.36 USD with a low forecast of 500.00 USD and a high forecast of 678.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 411.210
Low
500.00
Averages
631.36
High
678.00
Current: 411.210
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Microsoft Earnings Report: Strong Performance but Dim Outlook
- Strong Financial Performance: Microsoft's latest earnings report reveals revenue of $81.3 billion, a 17% year-over-year increase, exceeding expectations by nearly $1 billion, with an EPS of $4.14, up 24%, and net income soaring 60% to $38.5 billion, although slightly lower margins due to increased spending indicate a need for careful cost management.
- Critical Relationship with OpenAI: Microsoft has a backlog of $625 billion in future contracts, with $281 billion tied to OpenAI; if OpenAI fails to fulfill its obligations, Microsoft could face significant revenue losses, highlighting the importance of this partnership while current signs remain positive.
- Azure Growth Challenges: Azure's revenue grew 39% last quarter, but the company faces a challenge with demand outpacing available computing capacity, which may slow future growth; this situation, while manageable, could hinder Microsoft's ability to scale effectively in the cloud market.
- Increasing Capital Expenditures: Microsoft spent $37.5 billion on capital expenditures last quarter, primarily focused on building AI infrastructure, including data centers and processors, which is crucial for maintaining a competitive edge, though rapid technological advancements necessitate continuous investment in the latest hardware.
See More
Microsoft's Cloud Revenue Growth and Investment Opportunities
- Cloud Revenue Growth: Microsoft's Azure cloud computing division reported a 39% year-over-year revenue increase in Q2, surpassing management's guidance of 37%, indicating strong benefits from AI spending and potential for stock price appreciation.
- OpenAI Investment Upside: Holding a 27% stake in OpenAI, Microsoft stands to gain significantly if OpenAI proceeds with an IPO later this year, allowing the company to potentially cash out at an advantageous time and strengthen its market position.
- Attractive Valuation: Following a 10% drop in stock price, Microsoft now trades at less than 26 times forward earnings, a rare discount over the past three years, presenting a compelling buying opportunity for investors anticipating robust future growth.
- Future Growth Potential: With $625 billion in remaining performance obligations in its Azure business, Microsoft has substantial growth prospects in the ongoing AI race, making it a key reason to hold the stock over the next five years.
See More
Microsoft's Stock Decline Raises Concerns
- Significant Stock Drop: Microsoft (MSFT) has fallen approximately 26% from its intraday high on October 28, and if this trend continues, it would imply an annualized loss exceeding 100%, reflecting a pessimistic market outlook on its future performance.
- Technical Indicator Imbalance: As of Tuesday's close, MSFT is trading about 15% below its 200-day moving average, mirroring its performance in April 2025, indicating that the current oversold condition may lead to prolonged declines.
- Weak Relative Strength Indicator: The relative weekly RSI for MSFT against the State Street Technology Select Sector SPDR ETF (XLK) has dipped below 22 this week, a level only seen previously in May 2003, highlighting extreme relative weakness.
- Short-Term Risks and Opportunities: Despite a nearly 20% drop over the past three months, MSFT remains in a long-term uptrend and is currently testing its uptrend line; if a rebound occurs, the target price could approach the 38.2% retracement level near $463.
See More
IREN's Critical Moment in Cloud Computing Transformation
- Strategic Transformation: IREN Ltd, formerly Iris Energy, has pivoted from Bitcoin mining to cloud infrastructure in under two years, securing a $9.7 billion partnership with Microsoft to convert stranded energy sites into data centers for large-scale AI workloads.
- Stock Volatility: Ahead of its second-quarter earnings report, IREN's stock fell nearly 19% intraday on Wednesday, with a cumulative drop of 28% over the past five days, as market concerns about dilution risks intensified, leading to investor skepticism about future profitability.
- GPU Demand: IREN anticipates needing approximately 140,000 GPUs by year-end, with fears that equity issuance may be necessary to fund this requirement, causing unease among investors, particularly given the stock's 314% rise over the past year.
- Earnings Test: The upcoming earnings report will be crucial for IREN to validate its cloud ambitions; if it can demonstrate clear milestones, financing clarity, and a disciplined rollout, the Microsoft partnership may be seen as a platform rather than a gamble, otherwise it risks being viewed as a stroke of luck.
See More
Microsoft Stock Dip Presents Prime Buying Opportunity
- Stock Price Analysis: Following a 10% drop post-earnings, Microsoft is now approximately 20% off its all-time high, yet historical trends suggest this could be an optimal buying opportunity, particularly as the stock is currently valued at a relative low over the past three years.
- Profitability Assessment: Microsoft's forward P/E ratio indicates it is at its lowest valuation in three years, with potential for the stock to rebound to a 35 times forward earnings multiple, suggesting nearly 50% upside if profits remain stable.
- Financial Performance Highlights: In Q2 of fiscal 2026, Microsoft reported a 17% year-over-year revenue increase to $81.3 billion, exceeding management's guidance range, showcasing robust performance in its core segments, particularly in intelligent cloud and productivity.
- Cloud Computing Growth Momentum: Azure, Microsoft's key cloud platform, achieved a 39% year-over-year growth rate, indicating strong investment trends in AI, despite some computing capacity being allocated to internal needs, further solidifying Microsoft's competitive position in the market.
See More
Market Volatility and Stock Performance Recap
- Tech Stock Pressure: Despite attempts by high-multiple tech stocks like Microsoft to bounce back, the broader market remains under pressure due to fears that AI disruption could undermine traditional enterprise software companies, with the S&P 500 and Nasdaq down 1% and 2%, respectively.
- Eli Lilly Strong Performance: Pharmaceutical giant Eli Lilly saw its shares rise nearly 10% after delivering a significant earnings beat, indicating strong market confidence in its future growth and likely enhancing its market share in the pharmaceutical sector.
- Eaton Stock Volatility: Eaton's stock fluctuated near the flat line after a mixed fourth-quarter report, ultimately closing up nearly 1%, with investor focus on the planned spinoff of its mobility business in 2027 potentially serving as a future catalyst for growth.
- GE Vernova Decline: Despite an upgrade from Baird to outperform, GE Vernova's shares fell 7.5% to around $722, reflecting market concerns about the energy infrastructure cycle, although analysts expressed optimism about avoiding overcapacity issues in the near term.
See More
Microsoft Earnings Report: Strong Performance but Dim Outlook
- Strong Financial Performance: Microsoft's latest earnings report reveals revenue of $81.3 billion, a 17% year-over-year increase, exceeding expectations by nearly $1 billion, with an EPS of $4.14, up 24%, and net income soaring 60% to $38.5 billion, although slightly lower margins due to increased spending indicate a need for careful cost management.
- Critical Relationship with OpenAI: Microsoft has a backlog of $625 billion in future contracts, with $281 billion tied to OpenAI; if OpenAI fails to fulfill its obligations, Microsoft could face significant revenue losses, highlighting the importance of this partnership while current signs remain positive.
- Azure Growth Challenges: Azure's revenue grew 39% last quarter, but the company faces a challenge with demand outpacing available computing capacity, which may slow future growth; this situation, while manageable, could hinder Microsoft's ability to scale effectively in the cloud market.
- Increasing Capital Expenditures: Microsoft spent $37.5 billion on capital expenditures last quarter, primarily focused on building AI infrastructure, including data centers and processors, which is crucial for maintaining a competitive edge, though rapid technological advancements necessitate continuous investment in the latest hardware.
See More
Microsoft's Cloud Revenue Growth and Investment Opportunities
- Cloud Revenue Growth: Microsoft's Azure cloud computing division reported a 39% year-over-year revenue increase in Q2, surpassing management's guidance of 37%, indicating strong benefits from AI spending and potential for stock price appreciation.
- OpenAI Investment Upside: Holding a 27% stake in OpenAI, Microsoft stands to gain significantly if OpenAI proceeds with an IPO later this year, allowing the company to potentially cash out at an advantageous time and strengthen its market position.
- Attractive Valuation: Following a 10% drop in stock price, Microsoft now trades at less than 26 times forward earnings, a rare discount over the past three years, presenting a compelling buying opportunity for investors anticipating robust future growth.
- Future Growth Potential: With $625 billion in remaining performance obligations in its Azure business, Microsoft has substantial growth prospects in the ongoing AI race, making it a key reason to hold the stock over the next five years.
See More
Microsoft's Stock Decline Raises Concerns
- Significant Stock Drop: Microsoft (MSFT) has fallen approximately 26% from its intraday high on October 28, and if this trend continues, it would imply an annualized loss exceeding 100%, reflecting a pessimistic market outlook on its future performance.
- Technical Indicator Imbalance: As of Tuesday's close, MSFT is trading about 15% below its 200-day moving average, mirroring its performance in April 2025, indicating that the current oversold condition may lead to prolonged declines.
- Weak Relative Strength Indicator: The relative weekly RSI for MSFT against the State Street Technology Select Sector SPDR ETF (XLK) has dipped below 22 this week, a level only seen previously in May 2003, highlighting extreme relative weakness.
- Short-Term Risks and Opportunities: Despite a nearly 20% drop over the past three months, MSFT remains in a long-term uptrend and is currently testing its uptrend line; if a rebound occurs, the target price could approach the 38.2% retracement level near $463.
See More
IREN's Critical Moment in Cloud Computing Transformation
- Strategic Transformation: IREN Ltd, formerly Iris Energy, has pivoted from Bitcoin mining to cloud infrastructure in under two years, securing a $9.7 billion partnership with Microsoft to convert stranded energy sites into data centers for large-scale AI workloads.
- Stock Volatility: Ahead of its second-quarter earnings report, IREN's stock fell nearly 19% intraday on Wednesday, with a cumulative drop of 28% over the past five days, as market concerns about dilution risks intensified, leading to investor skepticism about future profitability.
- GPU Demand: IREN anticipates needing approximately 140,000 GPUs by year-end, with fears that equity issuance may be necessary to fund this requirement, causing unease among investors, particularly given the stock's 314% rise over the past year.
- Earnings Test: The upcoming earnings report will be crucial for IREN to validate its cloud ambitions; if it can demonstrate clear milestones, financing clarity, and a disciplined rollout, the Microsoft partnership may be seen as a platform rather than a gamble, otherwise it risks being viewed as a stroke of luck.
See More
Microsoft Stock Dip Presents Prime Buying Opportunity
- Stock Price Analysis: Following a 10% drop post-earnings, Microsoft is now approximately 20% off its all-time high, yet historical trends suggest this could be an optimal buying opportunity, particularly as the stock is currently valued at a relative low over the past three years.
- Profitability Assessment: Microsoft's forward P/E ratio indicates it is at its lowest valuation in three years, with potential for the stock to rebound to a 35 times forward earnings multiple, suggesting nearly 50% upside if profits remain stable.
- Financial Performance Highlights: In Q2 of fiscal 2026, Microsoft reported a 17% year-over-year revenue increase to $81.3 billion, exceeding management's guidance range, showcasing robust performance in its core segments, particularly in intelligent cloud and productivity.
- Cloud Computing Growth Momentum: Azure, Microsoft's key cloud platform, achieved a 39% year-over-year growth rate, indicating strong investment trends in AI, despite some computing capacity being allocated to internal needs, further solidifying Microsoft's competitive position in the market.
See More
Market Volatility and Stock Performance Recap
- Tech Stock Pressure: Despite attempts by high-multiple tech stocks like Microsoft to bounce back, the broader market remains under pressure due to fears that AI disruption could undermine traditional enterprise software companies, with the S&P 500 and Nasdaq down 1% and 2%, respectively.
- Eli Lilly Strong Performance: Pharmaceutical giant Eli Lilly saw its shares rise nearly 10% after delivering a significant earnings beat, indicating strong market confidence in its future growth and likely enhancing its market share in the pharmaceutical sector.
- Eaton Stock Volatility: Eaton's stock fluctuated near the flat line after a mixed fourth-quarter report, ultimately closing up nearly 1%, with investor focus on the planned spinoff of its mobility business in 2027 potentially serving as a future catalyst for growth.
- GE Vernova Decline: Despite an upgrade from Baird to outperform, GE Vernova's shares fell 7.5% to around $722, reflecting market concerns about the energy infrastructure cycle, although analysts expressed optimism about avoiding overcapacity issues in the near term.
See More
