Predicting where Microsoft’s (MSFT -1.04%) stock price will go in any given year is a challenge. However, one thing that’s easy to see is that the tech titan is going all in on artificial intelligence (AI). In December 2025, the company unveiled plans to invest $17.5 billion in India for AI development and more than $5.4 billion in Canada over the next couple of years. That adds to the enormous amount of capital it plans to invest in the U.S. and elsewhere in the coming years.
Microsoft’s heavy investment in AI should drive meaningful revenue and earnings growth in 2026 and beyond. Here’s a forecast on how this spending might affect an investment in its stock over the next five years.
NASDAQ: MSFT
Key Data Points
Microsoft (MSFT) forecast
Microsoft stock has performed well over the past several years. As of early December 2025, Microsoft had produced a more than 17% total return in 2025, outpacing the S&P 500’s over 16% return. The company’s outperformance is even wider over the past five years (18.8% average annual total return compared to 13.1% for the S&P).
Microsoft is in a strong position to continue beating the market in the coming years.
Microsoft’s highlights and risks
Microsoft is investing heavily to expand its dominance in cloud computing and AI. The company is also targeting the emerging quantum computing market. These catalysts have the tech titan on pace to grow its annual revenue to more than $500 billion in the coming years.
However, Microsoft isn’t the only player vying for these massive market opportunities. Microsoft is on track to spend over $94 billion this year, up from almost $65 billion last year (which was a 45% increase from the previous year). That’s only a piece of the $380 billion in expected capital spending by the big four cloud and AI players (Microsoft, Alphabet (GOOG -1.01%)(GOOGL -1.03%), Meta Platforms (META -1.30%), and Amazon (AMZN -1.78%). Meanwhile, a long list of other companies is investing heavily to capitalize on the cloud, AI, and quantum computing megatrends.
This intense competition could reduce Microsoft’s returns and growth profile. If the company’s earnings and revenue grow more slowly than expected, its stock price might not rise as much as anticipated in the future.
Microsoft and its stock have a bright forecast
Microsoft’s cloud and AI products are in high demand from customers due to the real-world impact they’re having on their operations. That’s why the company continues to increase its investments, which will enhance its ability to capitalize on the massive opportunity it sees ahead. While Microsoft isn’t the only company investing heavily in AI and other technologies, it’s an early leader in the space. That head start puts it in a strong position to expand its dominance, which could create a lot of value for shareholders in the coming years.
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