Microsoft’s (MSFT) Growth Story Is Still Its Cloud Business, Not AI

Microsoft Corporation (NASDAQ:MSFT) is one of the 12 Best Dow Stocks to Invest In Right Now. On July 1, Jefferies highlighted Microsoft Corporation (NASDAQ:MSFT) and Amazon as two of the biggest beneficiaries of continued growth in cloud computing. Based on a survey of 40 U.S. Chief Information Officers, the firm now expects cloud spending to grow 10.1% in 2026, slightly faster than its previous forecast. Nearly 95% of respondents said they expect to increase their cloud budgets next year. Among them, 53% expect single-digit growth, while 43% forecast double-digit growth. Only 3% expect their cloud spending to decrease.

Jefferies analysts stated in a note to clients:

“Cloud spend will modestly accelerate to 10.1% in ’26 vs. 9.6% in ’25 based on survey data, vs. our previous cloud survey, which implied a slight deceleration. ~95% of respondents expect their cloud budgets to grow y/y in ’26. 53% expect their cloud budgets to grow by single digits, while 43% anticipate a double-digit increase. Only 3% of survey respondents anticipate a marginal decrease in ’26 cloud spend, consistent w/our previous survey.”

The survey also pointed to continued growth in cloud adoption. By the end of 2027, 85% of respondents expect more than half of their IT workloads to run on the cloud, compared with 75% today. Moreover, 53% expect cloud workloads to account for more than 80% of their IT operations by 2027. While analysts point to continued growth opportunities, the market continues to see Microsoft as a software stock at risk of AI disruption, as evident from the -18.7% YTD performance of the stock.

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.

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