Morgan Stanley Says Microsoft Must Show Mid-40% Azure Growth

Morgan Stanley says Microsoft must show Azure growth in the mid-40% range and improve Microsoft 365 and Copilot monetization to support its recent stock rebound as investors assess whether the momentum can continue.

Microsoft’s Azure and other cloud services business grew 43% year over year in the quarter ended June 30, 2026. That is a past result; the mid-40% rate is a forward-looking hurdle. Microsoft’s quarterly revenue and cloud figures included 43% year-over-year growth in Azure and other cloud services for the quarter ended June 30, 2026.

The bank also identified added data center capacity and demand for cloud and artificial intelligence workloads as support for Azure growth. Expense discipline is another condition in its view.

Morgan Stanley described Microsoft’s valuation as high, but below historical averages when measured against growth. Its favorable risk-reward view also reflects expected earnings growth above 20% beyond fiscal 2027.