Microsoft's $678 billion contracted commercial backlog gives it recurring, subscription-grade revenue visibility that Nvidia lacks. 24/7 Wall St. set a $590.43 price target on the stock, implying 22% upside, while also flagging rising capex and falling free cash flow as the key risks.
Microsoft holds a $678 billion contracted commercial backlog that Nvidia cannot match, turning AI demand into recurring, subscription-grade revenue. 24/7 Wall St. set a $590.43 price target on the stock. That implies 22% upside from a $483.61 current price, with a buy rating attached. Confidence on the call is 90%.
Azure crosses $100 billion as backlog jumps 84%
Fiscal 2026 closed with $331 billion in annual revenue, up 18%. Azure crossed $100 billion in annual revenue for the first time, growing 41%. Q4 revenue of $90.01 billion beat consensus, extending the beat streak to five quarters. Non-GAAP EPS of $4.74 beat estimates by 11.81% that same quarter. Commercial RPO jumped 84% to $678 billion, and separately, Microsoft 365 Copilot reached over 30 million paid seats.
Shares are up 21.2% over the past month but down 2.98% in the past week, and roughly flat year to date at 0.12%.
Recent headlines about Microsoft's Maia 300 chip targeting Nvidia's AI dominance have added a vertical-integration narrative to the software story.
Bulls point to Azure guidance and Copilot seat growth
Azure guidance implies approximately 45% constant-currency growth in Q1 FY27. RPO is still growing 18% excluding OpenAI. Copilot net seat adds more than doubled quarter over quarter.
According to 24/7 Wall St., Nadella said: "I've never been more confident in Microsoft's opportunity to drive durable long-term growth." Morningstar has separately argued the stock is worth $600.
Risks include rising capex and falling free cash flow
Full-year capex hit $115.95 billion, up 79.62%. Full-year free cash flow fell to $66.99 billion, down 6.46%. Bears flag rising OpenAI investment losses of $3.1 billion in Q1 FY26 and Xbox weakness. Amy Hood said Microsoft can stagger data-center build-outs and delay GPU installations if demand shifts, and operating margins are guided to decline less than a point. The bear case lands at $507.41, above today's price.
Nvidia and Alphabet offer different trade-offs
Nvidia trades at a forward P/E of 25, with quarterly revenue growth of 85.2% and a 65.6% operating margin. Microsoft's 45.1% operating margin is lower. Still, its $331.8 billion in revenue tops Nvidia's $253.5 billion, and it is largely recurring. Alphabet is the cheaper cloud comp at a forward P/E of 17, which makes Microsoft look expensive against Alphabet but reasonable against Nvidia.
Source: 24/7 Wall St.
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