Analysts are bullish on Microsoft (MSFT) heading into earnings.

But as it faces heavy triple-top resistance, you may want to wait for a healthy pullback before jumping in on bullish forecasts.

UBS lifted its price target from $525 to $675, pointing to growth in Azure and Microsoft 365. Citi also raised its target, moving from $600 to $636, seeing Microsoft as one of the companies best positioned to benefit from AI. TD Cowen believes Azure could deliver stronger results than expected, which lead the firm to raise its target from $540 to $625 while keeping a buy rating. 

Goldman Sachs expects Azure revenue growth of roughly 46% to 47% and maintains a buy rating with a $640 target. Mizuho raised its target from $510 to $600 and keeping an outperform rating. Meanwhile, Jefferies raised its target from $575 to $650. Analyst Brent Thill sees room for Microsoft to beat expectations as demand for its AI services continues to exceed what the company can currently supply. 

That gives investors plenty to be excited about. Still, I’d be patient about buying here.

The stock has struggled three times to push through the same price area. Several technical indicators, including relative strength, MACD, and Williams’ %R, also suggest the rally may be stretched. For me, $551 is the level to watch. If Microsoft cannot break above it, a pullback toward support near $490 is one possible downside scenario. 

Sincerely,

Ian Cooper