5 Best Cloud Stocks to Buy as Azure Growth Hits 40%

2. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 312

With a short float of 1.08% and upside potential of 36.80%, Microsoft Corporation (NASDAQ:MSFT) earns a place on our list of the best cloud stocks to buy as Azure growth hits 40%.

Microsoft Corporation (NASDAQ:MSFT)’s restructured OpenAI partnership raised concern among investors, with the stock down roughly 15% so far this year. However, not everyone saw the restructuring through a bearish lens.

On May 13, 2026, Wedbush analyst Daniel Ives stood behind Microsoft Corporation (NASDAQ:MSFT) with an “Outperform” rating and a $575 price target, viewing the revised deal as a net positive rather than the strategic failure the market appears to be treating it as.

Under the restructuring, OpenAI’s revenue share to Microsoft Corporation (NASDAQ:MSFT) is now capped at $38 billion through 2030, a reduction from the previous arrangement. However, the removal of OpenAI’s prior option to defer payments to 2032 means Microsoft actually receives more in the near term, approximately $6 billion this year, versus the $4 billion previously expected.

The analyst cited other key tailwinds: IP rights to OpenAI’s models are locked in through 2032, Microsoft Corporation (NASDAQ:MSFT) stays on as OpenAI’s primary cloud provider, the equity stake survives into what could be a significant IPO, and the revenue-sharing requirement on Azure sales of OpenAI models is dropped entirely.

Bill Ackman read the situation similarly, stating:

“We view Microsoft’s recent decision to restructure its OpenAI partnership not as a concession but as part of a deliberate pivot toward a more open, multi-model architecture that better serves ‌enterprise customers.”

The underlying business momentum reinforced both views.

On April 29, 2026, Microsoft Corporation (NASDAQ:MSFT) reported fiscal third-quarter 2026 revenue of $82.9 billion, up 18% year-over-year, with Azure and cloud services up 40% and total cloud revenue climbing 29% to $54.5 billion. The AI segment crossed a $37 billion annualized revenue run rate.

Looking ahead, fourth-quarter Azure growth is guided at 39%-40% in constant currency, ahead of the 36.7% consensus.

Microsoft Corporation (NASDAQ:MSFT) is a global technology company that develops and sells a wide range of software, cloud services, devices, and business solutions, serving both individual users and enterprise customers worldwide. Its flagship products include Windows, Microsoft 365, Azure, LinkedIn, and Xbox.