Microsoft (MSFT) Stock Down 20%: Bank of America Sets $500 Target

Microsoft (MSFT) has declined about 20% year to date in 2026, despite growth in its AI and Azure businesses. Bank of America has reiterated its Buy rating with a $500 price target ahead of Microsoft's fiscal Q4 earnings on July 29. Azure revenue growth is crucial, with a forecast of 39% to 40% year-over-year. Additionally, a backlog of $627 billion in contracted revenue awaits conversion, with about 25% expected to transition into revenue over the next year, impacting investor sentiment on free cash flow due to anticipated capital expenditures of roughly $42 billion this quarter.