Exclusive: U.S. Government Anticipated to Receive Billions in TikTok Agreement
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 19 2025
0mins
Should l Buy MSFT?
Source: WSJ
Government Fee from TikTok Deal: The Trump administration is set to collect a multibillion-dollar fee from investors as part of the transaction to take control of TikTok's U.S. operations.
Approval from Leaders: President Trump and Chinese leader Xi Jinping have approved a preliminary framework for the deal, which involves negotiations with China.
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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: 393.670
Low
500.00
Averages
631.36
High
678.00
Current: 393.670
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 Faces Challenges and Opportunities in AI Business
- Performance Concerns: Microsoft's fiscal Q2 2026 results revealed strong overall performance; however, modest weaknesses in AI software and cloud services led to a more than 10% drop in stock price in one day, raising investor concerns about future growth.
- Copilot License Sales Growth: As of Q2 2026, Microsoft 365's Copilot licenses reached 15 million, doubling year-over-year but representing only a 3.7% market penetration, indicating limited market uptake that could hinder future revenue growth.
- Azure Revenue Growth Slowdown: Azure's revenue grew 39% year-over-year in Q2, surpassing Wall Street's 37.1% forecast, yet slower than the previous quarter's 40%, suggesting a potential loss of momentum that may affect investor confidence.
- Data Center Capacity Shortage: Microsoft's order backlog surged 110% year-over-year to $625 billion, with 45% from OpenAI, which may limit Azure's expansion and increase investment risks due to reliance on external funding and revenue growth.
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Dow Jones Index Surpasses 50,000 Milestone
- Historical Trend Analysis: The Dow Jones Industrial Average surpassed 50,000 on February 8, 2026, and historical data indicates that significant psychological milestones typically do not lead to market downturns; instead, they often propel the index higher, as seen with a 19% increase following the 30,000 mark.
- Earnings Drive: The continuous growth of corporate earnings among Dow components is a critical factor driving stock prices upward, and if this trend persists, the index is expected to keep rising, reflecting strong economic fundamentals.
- Macroeconomic Factors: While macroeconomic indicators such as inflation, interest rates, and GDP growth can impact the market, there are currently no signs of dramatic negative swings in these metrics, maintaining an optimistic market sentiment.
- Future Outlook: Despite the risks of an AI bubble burst, the Dow's composition has a low proportion of tech stocks, with major components like Goldman Sachs and Caterpillar likely to continue supporting the index, prompting investors to prepare for a potential rise to 60,000.
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- Earnings Performance: Amazon reported Q4 earnings per share (EPS) of $1.95, slightly below the $1.97 expected by analysts, although its revenue of $213.4 billion exceeded the $211.3 billion forecast, indicating strong performance in revenue generation.
- Capital Expenditure Forecast: Amazon's projected capital expenditures for 2026 are set at $200 billion, a significant increase from $132 billion in 2025, which caused negative investor sentiment despite most spending being directed towards the high-demand AWS business.
- AWS Growth Momentum: AWS revenue surged 24% year-over-year in Q4, reaching an annualized revenue run rate of $142 billion, showcasing robust market demand and ongoing growth potential, particularly in AI workloads.
- Advertising Revenue Growth: Amazon's advertising revenue increased by 22% year-over-year in Q4 to $21.3 billion, with sponsored product ads and Prime Video ads significantly contributing to revenue growth, further solidifying its position in the advertising market.
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- Historical Trend Analysis: The Dow Jones Industrial Average surpassed 50,000 on February 8, 2026, and historical data suggests that major psychological milestones typically do not lead to market declines but rather continued growth, prompting investors to remain vigilant.
- Earnings as a Driver: The ongoing growth in corporate earnings among Dow components indicates that if this trend continues, the index is likely to keep rising, reflecting strong fundamentals and bolstering market confidence.
- Macroeconomic Environment: Current macroeconomic indicators such as inflation, interest rates, and GDP growth show no signs of dramatic negative swings, providing a stable backdrop that supports the Dow's continued ascent.
- Investor Preparedness: While there are risks associated with a potential AI bubble burst, investors should maintain diversified portfolios and cash reserves to navigate possible market fluctuations, while also being ready for further gains in the Dow.
See More
Analysis of Microsoft and Alphabet's Cloud Computing Competition
- Significant Investment Returns: Microsoft's investment in OpenAI has resulted in a 17% revenue increase and a 60% earnings per share (EPS) growth in its latest earnings report, indicating that its strategic positioning in AI is yielding positive results.
- Cloud Market Performance: Microsoft Azure's revenue grew by 39% year-over-year in Q2 FY 2026, showcasing strong performance; however, Google Cloud outperformed with a 48% revenue growth in Q4, highlighting its competitive edge in market share.
- AI Model Development Strategy: Microsoft opted to invest in OpenAI rather than develop its own generative AI models, allowing it to offer a diverse range of AI solutions, while Alphabet's development of the Gemini model has granted it greater market control, despite the higher costs incurred by the latter.
- Valuation Discrepancies Impact Investment Decisions: Following a sell-off after its Q2 earnings announcement, Microsoft's valuation is significantly lower than Alphabet's, making it a more attractive investment option in the current market environment, even though both companies exhibit relatively similar business performance.
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Analysis of AI Competition Between Microsoft and Alphabet
- Microsoft's Investment Strategy: By holding a 27% stake in OpenAI, Microsoft, while lacking its own generative AI model, offers a variety of generative AI models through Azure Foundry, positioning itself as an AI facilitator, which reduces development costs and enhances market competitiveness.
- Alphabet's Proactive Development: Alphabet's Gemini model has emerged as an industry leader, leveraging deep insights into user data to provide more personalized AI services; despite the substantial resources spent on development, the increase in market value indicates the potential returns of this investment.
- Financial Performance Comparison: In their latest earnings reports, Microsoft reported a 17% year-over-year revenue increase and a 60% rise in earnings per share, while Alphabet's revenue grew by 18% and EPS by 31%, showing comparable performance, but Google Cloud's 48% growth rate highlights its strong position in the cloud computing market.
- Valuation Discrepancy: Following a sell-off after its Q2 earnings report, Microsoft is now significantly cheaper than Alphabet, and despite similar business performances, Microsoft's lower valuation makes it a more attractive investment option at present, reflecting market optimism about future AI growth.
See More
Microsoft Faces Challenges and Opportunities in AI Business
- Performance Concerns: Microsoft's fiscal Q2 2026 results revealed strong overall performance; however, modest weaknesses in AI software and cloud services led to a more than 10% drop in stock price in one day, raising investor concerns about future growth.
- Copilot License Sales Growth: As of Q2 2026, Microsoft 365's Copilot licenses reached 15 million, doubling year-over-year but representing only a 3.7% market penetration, indicating limited market uptake that could hinder future revenue growth.
- Azure Revenue Growth Slowdown: Azure's revenue grew 39% year-over-year in Q2, surpassing Wall Street's 37.1% forecast, yet slower than the previous quarter's 40%, suggesting a potential loss of momentum that may affect investor confidence.
- Data Center Capacity Shortage: Microsoft's order backlog surged 110% year-over-year to $625 billion, with 45% from OpenAI, which may limit Azure's expansion and increase investment risks due to reliance on external funding and revenue growth.
See More
Dow Jones Index Surpasses 50,000 Milestone
- Historical Trend Analysis: The Dow Jones Industrial Average surpassed 50,000 on February 8, 2026, and historical data indicates that significant psychological milestones typically do not lead to market downturns; instead, they often propel the index higher, as seen with a 19% increase following the 30,000 mark.
- Earnings Drive: The continuous growth of corporate earnings among Dow components is a critical factor driving stock prices upward, and if this trend persists, the index is expected to keep rising, reflecting strong economic fundamentals.
- Macroeconomic Factors: While macroeconomic indicators such as inflation, interest rates, and GDP growth can impact the market, there are currently no signs of dramatic negative swings in these metrics, maintaining an optimistic market sentiment.
- Future Outlook: Despite the risks of an AI bubble burst, the Dow's composition has a low proportion of tech stocks, with major components like Goldman Sachs and Caterpillar likely to continue supporting the index, prompting investors to prepare for a potential rise to 60,000.
See More
Amazon Shares Drop 6% Post Earnings Report Amid Market Overreaction
- Earnings Performance: Amazon reported Q4 earnings per share (EPS) of $1.95, slightly below the $1.97 expected by analysts, although its revenue of $213.4 billion exceeded the $211.3 billion forecast, indicating strong performance in revenue generation.
- Capital Expenditure Forecast: Amazon's projected capital expenditures for 2026 are set at $200 billion, a significant increase from $132 billion in 2025, which caused negative investor sentiment despite most spending being directed towards the high-demand AWS business.
- AWS Growth Momentum: AWS revenue surged 24% year-over-year in Q4, reaching an annualized revenue run rate of $142 billion, showcasing robust market demand and ongoing growth potential, particularly in AI workloads.
- Advertising Revenue Growth: Amazon's advertising revenue increased by 22% year-over-year in Q4 to $21.3 billion, with sponsored product ads and Prime Video ads significantly contributing to revenue growth, further solidifying its position in the advertising market.
See More
Dow Jones Surpasses 50,000 Milestone, Historical Trends Suggest Continued Growth
- Historical Trend Analysis: The Dow Jones Industrial Average surpassed 50,000 on February 8, 2026, and historical data suggests that major psychological milestones typically do not lead to market declines but rather continued growth, prompting investors to remain vigilant.
- Earnings as a Driver: The ongoing growth in corporate earnings among Dow components indicates that if this trend continues, the index is likely to keep rising, reflecting strong fundamentals and bolstering market confidence.
- Macroeconomic Environment: Current macroeconomic indicators such as inflation, interest rates, and GDP growth show no signs of dramatic negative swings, providing a stable backdrop that supports the Dow's continued ascent.
- Investor Preparedness: While there are risks associated with a potential AI bubble burst, investors should maintain diversified portfolios and cash reserves to navigate possible market fluctuations, while also being ready for further gains in the Dow.
See More
Analysis of Microsoft and Alphabet's Cloud Computing Competition
- Significant Investment Returns: Microsoft's investment in OpenAI has resulted in a 17% revenue increase and a 60% earnings per share (EPS) growth in its latest earnings report, indicating that its strategic positioning in AI is yielding positive results.
- Cloud Market Performance: Microsoft Azure's revenue grew by 39% year-over-year in Q2 FY 2026, showcasing strong performance; however, Google Cloud outperformed with a 48% revenue growth in Q4, highlighting its competitive edge in market share.
- AI Model Development Strategy: Microsoft opted to invest in OpenAI rather than develop its own generative AI models, allowing it to offer a diverse range of AI solutions, while Alphabet's development of the Gemini model has granted it greater market control, despite the higher costs incurred by the latter.
- Valuation Discrepancies Impact Investment Decisions: Following a sell-off after its Q2 earnings announcement, Microsoft's valuation is significantly lower than Alphabet's, making it a more attractive investment option in the current market environment, even though both companies exhibit relatively similar business performance.
See More
Analysis of AI Competition Between Microsoft and Alphabet
- Microsoft's Investment Strategy: By holding a 27% stake in OpenAI, Microsoft, while lacking its own generative AI model, offers a variety of generative AI models through Azure Foundry, positioning itself as an AI facilitator, which reduces development costs and enhances market competitiveness.
- Alphabet's Proactive Development: Alphabet's Gemini model has emerged as an industry leader, leveraging deep insights into user data to provide more personalized AI services; despite the substantial resources spent on development, the increase in market value indicates the potential returns of this investment.
- Financial Performance Comparison: In their latest earnings reports, Microsoft reported a 17% year-over-year revenue increase and a 60% rise in earnings per share, while Alphabet's revenue grew by 18% and EPS by 31%, showing comparable performance, but Google Cloud's 48% growth rate highlights its strong position in the cloud computing market.
- Valuation Discrepancy: Following a sell-off after its Q2 earnings report, Microsoft is now significantly cheaper than Alphabet, and despite similar business performances, Microsoft's lower valuation makes it a more attractive investment option at present, reflecting market optimism about future AI growth.
See More
