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Microsoft’s Next AI Leg: Can MSFT Still Outperform From Here?

Written by Chris Markoch

It may be time for investors to start shopping for discounted stocks. It might surprise some to find that Microsoft Corporation (NASDAQ: MSFT) is on the metaphorical clearance rack in relation to its cohort of Magnificent 7 stocks. In fact, MSFT stock is within about 10% of its 52-week low caused by the tariff turmoil in early 2025.

And it’s not just price; there’s a valuation issue to consider. As of this writing, MSFT stock trades at a price-to-earnings (P/E) ratio of approximately 23X earnings. That puts it at a discounted level not seen since 2022.

This leaves investors with an intriguing dilemma. Is Microsoft a blue-chip stock whose best days are behind it? Or is this a stock that’s offering investors a generational buying opportunity?

The Sell-Off Hasn’t Been Entirely Unjustified

It’s been a difficult five months to own technology stocks. Many narratives have been layered on one another, making investors skeptical. The latest rumor centers around artificial intelligence (AI) wiping out the profit margins of software companies and software-related stocks.

There’s also broad concern about capital expenditures (CapEx) to support the growth of AI infrastructure. Analysts expect Microsoft to spend between $100 billion and $120 billion to support its ongoing AI buildout in 2026. That’s up sharply from prior years.

Microsoft also presents some company-specific concerns. For example, the company’s partnership with OpenAI looks shakier than it did 18 months ago. To put a dollar figure on that partnership, OpenAI signed a multi-year deal with Microsoft in October 2025 valued at $250 billion. That’s about 40% of Microsoft’s $625 billion backlog.

The problem for analysts is that OpenAI doesn’t have Microsoft’s balance sheet. That’s leading to appropriate concerns over how much of that $250 billion will be recognized.

Microsoft’s AI Monetization Faces Early Challenges

Investors also have concerns about Microsoft’s in-house AI development, specifically Copilot Pro. This is the paid, premium version of Microsoft’s Copilot AI assistant. It’s sold as an add-on to Personal and Family subscriptions at about $20 dollars per user per month.

Copilot Pro unlocks deeper integration of Copilot in core Office apps like Word, Excel, and Outlook, offers priority access to more advanced models (such as GPT‑4‑class models) even during peak times, raises or removes many of the usage limits in the free tier, and expands image creation, “deep research,” and other advanced features for power users who rely heavily on Microsoft 365.

However, the launch of Copilot Pro has gotten off to a lackluster start. In its Q2 2026 conference call, the company said it now has 15 million paid Copilot subscribers. However, that’s only about 3% of its 450 million commercial customers.

Why This Time Isn’t Different

None of those concerns matters if the company can continue to produce strong growth. However, that’s another area where analysts are becoming concerned. It’s not that Microsoft isn’t growing. The concern is whether it can grow as strongly as needed to justify the company’s CapEx spending and potential AI headwinds, particularly with their Azure cloud computing division.

But the better question is, can Microsoft afford its growth? The answer to that is a resounding yes. The company generated over $97 billion in free cash flow over the trailing 12 months. That’s not a company that’s in danger of having to raise capital to fund its growth ambitions.

With all that said, Microsoft presents investors with a growth story that may not be fully appreciated, and very much not priced into its stock. Beyond its compelling P/E ratio, the company now has a price-to-earnings growth ratio of around 1.4, which is approaching a level known as a strong buy.

Speaking of being a strong buy, analyst sentiment continues to be bullish. The Microsoft analyst forecasts on MarketBeat show that 45 analysts have a consensus Moderate Buy rating on the stock with a price target of $591.87, an upside of over 55%.

Key Support and Oversold Signals

The MSFT stock weekly chart shows a multi‑year uptrend still intact, with price recently pulling back to test long‑term trendline support near the rising 200‑week moving average around the high‑370s. The current consolidation follows a sharp decline from all‑time highs, suggesting investors are reassessing rich AI‑driven expectations rather than abandoning the broader bullish trend.

Volume has picked up on recent down weeks, signaling distribution, but not yet the type of capitulation that typically ends a major cycle. The 14‑week RSI has slipped into oversold territory near 30, a zone that has historically preceded tradable rebounds in prior MSFT pullbacks. As long as the stock holds above the 200‑week moving average and the long‑term trendline, the primary uptrend remains technically viable, with risk skewed toward a medium‑term basing phase rather than a full trend reversal. READ THIS STORY ONLINE

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What Q1 Earnings Could Mean for the S&P 500 Uptrend

Written by Thomas Hughes

The Q1 2026 earnings reporting season is fast approaching, and all signs suggest it will be a good one. Headwinds, risks, and fears remain, but the outlook for growth provides a triple tailwind for the market, likely to continue in Q2. The tailwind includes earnings growth, an outlook for sequential acceleration, and steadily rising forecasts, setting the bar higher with each weekly round of estimate revisions. With this in play, the S&P 500 has almost nowhere to go but up and will likely resume its uptrend before the reporting period is over. 

A Triple-Tailwind for S&P 500 Price Action in Earnings Forecasts

At face value, the consensus of estimates puts Q1 S&P 500 earnings growth at 12.5%, with approximately three weeks until the peak season begins. That starts on May 14 with a report from JPMorgan Chase (NYSE: JPM), the largest bank outside of China. The consensus for Q1 is down from the 2025 highs but up significantly from the recent lows, likely to continue higher as the season progresses, and outperformance is likely.

S&P 500 earnings tend to outperform the consensus estimate leading into the season by 300 to 500 basis points and have been running at the high-end of that range in recent seasons. The likely outcome is that Q1 results come closer to 15.5% and potentially higher, given AI trends. 

Nothing in the AI data flow suggests that spending is easing, only increasing, as NVIDIA’s (NASDAQ: NVDA) and Micron Technologies’ (NASDAQ: MU)Q4 2025 last reports revealed. The likely outcome is that demand remained strong in Q1, leading these and other AI infrastructure names to outperform their already robust forecasts. Sectorally, the Information Technology Sector is forecast to produce the strongest growth at nearly 45% as of late March. The consensus for this sector rose by 1,000 basis points (bps) over the last three months, resulting in high expectations.

The next strongest sector is projected to be Materials at 24%, underpinned by datacenter demand, and then Financials. Other than those, no other sector is forecast to produce double-digit gains and three, led by Healthcare, are forecast to contract. Within those, the Energy sector is likely to outperform, as energy prices have skyrocketed, signaling windfall revenue and earnings. Healthcare, on the other hand, risks underperforming as burnout, employee shortages, rising costs, and cybersecurity issues erode results. 

Guidance to Sustain Uptrend: Concentration Reemerges as a Risk

The earnings results will trigger market responses, but it will be the guidance that sustains them. As it stands, S&P 500 earnings growth is expected to accelerate again in Q2 and then sustain a high-teens pace through the year’s end. Guidance affirming this trend will go a long way towards invigorating market action and catalyzing new highs. 

Concentration is among the risks for investors. The market rally has been broadening and may continue to do so, but the earnings outlook suggests that the focus will remain on NVIDIA and Magnificent Seven. NVIDIA continues to hold the number one position, accounting for more than 7.1% of the index, while the top seven names account for approximately 33%, and the next three bring the top ten to just over 40%. At these levels, investors should expect volatility to increase on both upswings and downswings, with NVIDIA at the center of any major market movement. 

Oil prices are another risk, as they will impair earnings power across sectors. The bigger risk, however, is the impact of oil on inflation and the outlook for interest rate cuts, which has deteriorated. The market now prices in only a slim chance for rate cuts this year, which is a headwind for businesses and the broadening rally. Lower interest rates are critical for pre-revenue and pre-earnings businesses, while high rates pose hurdles, leaving only established blue-chip players to compete. 

Advanced Micro Devices Best-Positioned to Rocket Higher

Advanced Micro Devices (NASDAQ: AMD) is the best-positioned stock for explosive gains this season. While its results are expected to be strong, investors will be looking at the guidance and updates on the upcoming MI450 product launch. The launch, slated for Q3, could accelerate AMD revenuegrowth to triple-digit levels within quarters. READ THIS STORY ONLINE

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Why Boston Scientific’s Big Dip Could Be a Bigger Opportunity

Written by Nathan Reiff

Medical device manufacturer Boston Scientific Corp. (NYSE: BSX) is seemingly off to a tough start to the year, as shares have plunged by 26% year-to-date (YTD) and by almost a third in the last year. But investors looking more closely at the healthcarecompany’s fundamentals may find that it has actually posted some notably strong results recently, including adjusted earnings per share (EPS) of 80 cents for the last quarter, which was 2 cents above consensus estimates.

Indeed, a detailed look at Boston Scientific’s earnings suggests that the company is doing quite well—its electrophysiology (EP) segment, and Watchman products in particular, have grown rapidly and seem on track to continue delivering going forward. What’s more, the company is expected to release results from its Champion-AF trial by the end of March, which could have a major impact on the product’s addressable client base. Investors may therefore be tempted to buy the dip in BSX stock, though it’s also important to keep in mind why shares have fallen and what other risks may remain.

Is the Boston Scientific Dip Justified?

Shares of BSX plunged following its earnings release in February, despite revenue climbing about 16% year over year (YOY) and adjusted EPS beating expectations. Free cash flow also improved considerably, climbing by 38% YOY to about $3.7 billion.

So what was behind the selloff following earnings? It may be that investors were disappointed by the company’s 2026 organic revenue guidance, which forecast YOY growth of 10% to 11%. This would be quite a bit slower than 2025’s full-year revenue growth of about 20%.

Part of this is due to the near-term impact of the company’s discontinuation of certain products in its Axios catheters and other lines at the start of the year.

Management expects that this will slow down early-2026 growth by about 150 basis points.

However, much of Boston Scientific’s business remains not only intact, but growing and efficient. The company has guided another year of growing free cash flow, with $4.2 billion anticipated in 2026, as well as a boost to operating margin expansion and other metrics.

The Champion Trial Could Be a Catalyst for Reversal

What might help to reverse Boston Scientific’s downward slide in share price is the results of its Champion trial, which aims to measure the company’s Watchman stroke reduction implant against oral anticoagulation treatments. Investors should watch these results closely, as the addressable patient pool for Watchman could quadruple to 20 million if the trial shows promising outcomes. 

The scope of that impact, should results be positive, is potentially significant for Boston Scientific over multiple years, as it would then be able to catalyze sales growth throughout the world by identifying millions of new potential patients.

There is another potential factor that could drive Boston Scientific’s growth: the neurovascular device company Penumbra (NYSE: PEN), which Boston Scientific has plans to acquire. Penumbra’s products would allow Boston Scientific an entry point to the mechanical thrombectomy market, an area in which it currently does not have any presence. The $14.5-billion acquisition is backed in part by a $6-billion term loan that the company secured in late February. Although this puts pressure on its finances, the surging free cash flow and overall fundamental strengths associated with Boston Scientific’s pre-existing business lines may mitigate any near-term concerns investors have.

Risks and Analyst Perspectives Are Worth Keeping in Mind

Of course, a major risk to Boston Scientific’s growth trajectory would be a negative result to its Champion trial. Not only would this essentially eliminate the idea that Watchman’s sales growth would continue to accelerate, but it also would have a severe impact on the company’s overall revenue growth plans, perhaps making its guidance of 10% to 11% sales growth for 2026 less tenable.

On the other hand, investors might want to note how optimistic Wall Street analysts are about Boston Scientific. Out of 25 ratings, 23 are Buys, and just two are Holds. This includes a number of Buy ratings reissued by institutions, including Stifel Nicolaus, Jefferies, and Truist Financial, all in March. Notably, some of these analysts have tempered their price targets for BSX shares, even while retaining Buy ratings. 

Still, Wall Street expects that there is ample upside potential, as the consensus price target of $106.27 is over 50% above where BSX currently trades. READ THIS STORY ONLINE

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