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Office Suite Gets Pricier: Microsoft’s Bold Move Comes With Risk
Written by Chris Markoch on December 9, 2025
Summary
- Microsoft will increase Office commercial subscription pricing by up to 33% in July 2026, even as AI adoption lags initial expectations.
- Enterprise customers continue to demand clearer ROI on Copilot, but Microsoft 365 remains essential infrastructure with low platform-switch risk.
- Analysts maintain bullish targets between $650 and $675, suggesting confidence in pricing power and a potential technical reversal for MSFT stock.
For the first time since 2022, Microsoft Corporation (NASDAQ: MSFT) announced that it will increase the cost for commercial customers to use its Office productivity suite. Beginning July 1, 2026, subscribers will have to pay up to 33% more for the suite.
On its surface, this announcement seems like nothing special. Microsoft said it’s added 1,100 features to Microsoft 365, Security, Copilot, and SharePoint. Many of these features also integrate artificial intelligence (AI).
This also comes on the heels of Microsoft increasing the price of its Office suite for personal consumers early in 2025. The company said there was no meaningful churn from that price increase, which indicates consumers saw value in the features.
However, this price increase comes at a time when news broke that Microsoft’s commercial customers may be reluctant to pay for the latest AI features.
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Commercial Customers Look for ROI
In late November, a gap seemed to form between Microsoft’s AI ambitions and the pace at which commercial customers, particularly at the enterprise level, were willing to adopt them. The news was that Microsoft (allegedly) lowered its sales growth targets for certain AI products after several sales staff missed their goals in the company’s 2025 fiscal year that ended in June.
Microsoft quickly and stridently denied the allegations, and the stock has made back almost all of the losses from that dip. Nevertheless, it put another brick in the wall of worry that investors have to climb with MSFT stock, as well as most other technology stocks in the AI trade.
Against that backdrop, the 2026 price increase feels less like a victory lap and more like a recalibration. AI add-ons may not be selling as fast as projected, but the Office suite still sits in a place no competitor can meaningfully dislodge.
Microsoft 365 Has Become a Non-Negotiable
For most organizations, Microsoft 365 is more than a software decision. It’s part of a company’s infrastructure, as embedded and non-negotiable as electricity and payroll. That’s precisely why the company can push through a pricing reset without expecting mass defections to Google Workspace or lower-cost productivity platforms.
Microsoft appears to be reframing AI not as an optional upgrade, but as part of the standard productivity contract. This has relevance for Copilot, which is a premium layer that sits on top of the Office stack.
Instead of trying to convince every enterprise to purchase Copilot à la carte, the company can fold AI-assisted features into the base subscription and justify a higher price floor. In practical terms, this shifts the narrative from “pay extra for AI” to “AI is now embedded in the Office experience you already can’t run without.”
The timing may not be perfect, but the logic tracks: if AI upsells plateau, subscription pricing becomes the steadier lever. And with Microsoft’s commercial suite still commanding near-universal dependence, 2026’s increase looks less like a risk and more like inevitability.
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Analysts Are Still Bullish on MSFT Stock
In the midst of this noise, analysts continue to be bullish about MSFT stock. On Dec. 3, Jefferies reiterated its Buy rating on Microsoft with a price target on $675. Then on Dec. 4, DA Davidson reiterated its Buy rating with a $650 price target. Both price targets are above the consensus price target of $632.34, which is itself 28.7% above the stock’s closing price on Dec. 8.
MSFT stock is now down approximately 10% from the all-time high it reached in late October. More importantly, it looks less overvalued based on its key ratios.
When you put it all together, MSFT stock looks attractive at any price under $500, and the MACD is flattening and appears to be ready for a bullish reversal.
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