Cloud rentals and Copilot seats can beat the modest growth the shares demand. Heavy building limits upside, leaving about 9% to $577. Hold.
Key points
- $678 billion booked for future revenue in Jun-2026 under contract, up 84% in Jun-2026 from a year earlier, with 25% growth without OpenAI in Jun-2026.
- 30 million paid Copilot seats in Jul-2026 with usage billing added, lifting sales per user in FY26.
- $115.9 billion building spend in FY26 for data centers and chips, cutting cash after investment to $67.0 billion in FY26.
The call
The price asks for little. At $529.70 per share in Oct-2026, the shares need only single digit growth. That pace is 9% yearly sales growth through Jun-2028. It sits well below 18% growth in FY26.
Quarterly revenue with forecasts ($ billions)SEC XBRL via desk briefing to Jun-26; forecasts are mine, as of Oct-2026.
I expect a small beat, not a surge. Azure, the cloud rental business, grew 43% in Jun-2026 with demand above supply. Copilot, the work helper, passed 30 million paid seats in Jul-2026 and added usage billing. Heavy building keeps cash thin but funds double digit growth.
Valuation
| Item | Figure |
|---|
| FY28E revenue | $429.5 billion in FY28 |
| FY28E operating profit | $195.4 billion in FY28 |
| FY28E profit per share | $21.37 per share in FY28 |
| Target multiple | 27 times profit in Oct-2027 |
| Target price | $577 per share in Oct-2027 |
Growth slows slightly as margins ease- Rev growth reported
- Mine
- Op margin
SEC XBRL via desk briefing to FY26; forecasts are mine, as of Oct-2026.
I use 27 times profit in Oct-2027, below 29.5 times trailing profit in Oct-2026. The multiple, meaning price per dollar of profit, fits slower growth with strong margins. Upside near 9% in Oct-2026 gives a Hold with positive drift.
Risks
- Data center overbuild could strand assets in FY27, seen in falling Azure use rates and slower contract growth.
- OpenAI concentration could dent sales in FY27, seen in weaker receivables collection and backlog without OpenAI.
- Business customers could cut software spend in FY27, seen in fewer Copilot seat adds and lower renewals.
What would change my mind
I would turn more positive if Azure stays above 40% growth with rising cash after investment through Mar-2027.