Microsoft (MSFT) has had a rough stretch in recent months, trading around 20% below all-time highs. Investors have turned cautious on the software giant, given its rising capital expenditures amid a difficult macro environment.
While much of the investor anxiety centers on AI costs and competition, Microsoft is also restructuring from the inside out. According to a memo viewed by The Wall Street Journal, Chief People Officer Amy Coleman told employees the company is rolling out a voluntary retirement program for a small percentage of long-serving U.S. workers.
It is the first time Microsoft has offered such a program.
- About 7% of its roughly 125,000 U.S. employees are eligible.
- To qualify, workers must be at or below the senior director level, and their combined age and years of service must total at least 70.
- Coleman wrote in her memo that the company needs to "simplify to move faster and deliver the solutions our customers count on," according to the WSJ.
Microsoft is also changing how it awards stock, decoupling it from bonus structures. This comes alongside a string of leadership reshuffles, states the Journal.
- Chief Executive Satya Nadella promoted Judson Althoff to lead commercial operations last October.
- In March, he created a unified Copilot team under Jacob Andreou.
- Mustafa Suleiman, the high-profile AI chief hired in 2024, saw his role narrow to focus on proprietary models.
- Two longtime executives, Rajesh Jha and gaming chief Phil Spencer, both announced their exits this year.
Microsoft Remains Bullish on AI Moat
At the Morgan Stanley Technology, Media and Telecom Conference in March, Nadella argued that the company is not losing the AI race.
He described how artificial intelligence is driving a surge in what he called "artifact creation," with Microsoft's SharePoint and OneDrive seeing a dramatic uptick in documents and files generated through AI tools.
He also pointed to GitHub, where AI-generated public repositories now account for roughly 4% to 5% of total activity.
Nadella acknowledged that data center buildouts, silicon, storage, and compute costs are all rising together. But he argued that Microsoft's software capabilities, diverse customer base, and ability to optimize across hardware generations give it a durable edge on return on invested capital.
When asked about concerns over Anthropic's Claude and other rivals, Nadella pointed to the trust Microsoft has built with corporate IT buyers. Security, compliance, and enterprise-grade observability are what earn Microsoft its permission to operate at scale, he said.
"We want to love our IT customers," Nadella said at the conference, noting that enterprise clients are looking for far more than a capable model.
Why Microsoft Copilot Could Be a Key Driver
Copilot, Microsoft's flagship AI product family, has struggled with consumer confusion and integration challenges. The unified team now under Andreou is a direct response to those problems. Nadella told investors at the Morgan Stanley conference that the next big unlock is what he calls "WorkIQ," the underlying intelligence layer sitting beneath Microsoft 365.
It pulls together meeting notes, email threads, SharePoint documents, and other enterprise data into a single reasoning layer. That, he argued, is what chief information officers are paying for and what many investors are underestimating.
With Microsoft 365 subscriptions rising by more than 20% in 2025, the user base is clearly growing. The question this earnings call will start to answer is whether those users are translating into the kind of revenue and margin expansion that justifies the billions being poured into AI infrastructure.
For Microsoft stock fans, the wait is almost over.
What Is the MSFT Stock Price Target?
Analysts tracking MSFT stock forecast adjusted earnings to expand from $13.64 in fiscal 2025 to $32 in fiscal 2030. If the stock is priced at 25x forward earnings, which is lower than its 10-year average of 28x, it could return close to 90% over the next three years.
Out of the 49 analysts covering the tech giant, 41 recommend “Strong Buy,” four recommend “Moderate Buy,” and four recommend “Hold.” The average MSFT stock price target is $571.95, about the current price of about $424.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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