Predicting where Microsoft’s (MSFT +0.41%) 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.
The 2026 forecast
Microsoft reported its fiscal 2026 first-quarter results in late October 2025. The technology company’s revenue increased 18% to $78 billion while its earnings per share rose 13%. Microsoft is making money from its cloud and AI products because they're driving real-world impacts for its customers. The company expects to continue growing briskly, anticipating double-digit revenue and operating income growth over the coming year.
This outlook has Wall Street analysts predicting that Microsoft’s stock will be much higher a year from now. The consensus 12-month price target is $625 per share. That’s an almost 28% increase from its share price in early December 2025 (around $490 a share).
That seems a little too optimistic to me, given that the company is only on track to grow its earnings at a double-digit rate. I think a $550 share price is a more reasonable expectation for Microsoft stock next year (a roughly 12% increase from its price near the end of 2025).
The 2030 forecast
AI will continue to be a big driver for Microsoft in the coming years. It invested a record of almost $35 billion in capex during its fiscal first quarter as it seeks to capitalize on this enormous opportunity. The company expects capital spending to continue rising in 2026. That higher investment spending will help drive robust growth in the coming years.
AI isn’t Microsoft’s only growth catalyst. The company believes the next big accelerator for its cloud computing business will be quantum computing. It’s a massive potential future market opportunity. Smaller rival IonQ (IONQ -4.59%) believes it could grow into an $87 billion market by 2035. Capitalizing on this large market opportunity would further enhance Microsoft’s already robust long-term growth prospects.
In 2023, Microsoft CEO Satya Nadella set a bold goal of growing the company’s revenue to more than $500 billion by 2030. That has the technology company on track to increase its sales by almost 80% from the over $280 billion it hauled in during its 2025 fiscal year.
If Microsoft can hit that ambitious target, which it unveiled before AI really started to hit its stride, the company’s share price could rise significantly over the next few years. If it can hit its $500 billion revenue target, shares could grow at a similar pace. I think they could top $850 a share by 2030, representing a roughly 75% increase from their level in late 2025.
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 +1.40%)(GOOGL +1.48%), Meta Platforms (META +0.52%), and Amazon (AMZN +1.63%). 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.
About the Author
