Microsoft Has Something Nvidia Doesn’t and Here’s Why it Matters

Microsoft Has Something Nvidia Doesn’t and Here’s Why it Matters

Vandita Jadeja

Sat, August 22, 2026 at 8:00 PM GMT+3 4 min read

Quick Read

• Microsoft's $678 billion commercial backlog and Azure's explosive growth underpin a $590 price target implying 22% upside.

• MSFT's $332 billion in recurring revenue tops NVDA's total, while GOOGL trades cheaper at a forward P/E of 17 versus MSFT's 24.

• Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.

Microsoft (NASDAQ:MSFT) has spent the last year alongside NVIDIA (NASDAQ:NVDA) as the two poster children of the AI trade. But Microsoft has one thing Nvidia does not: a $678 billion contracted commercial backlog that turns AI demand into recurring, subscription-grade revenue.

Our 24/7 Wall St. price target for Microsoft is $590.43, and that backlog is a big reason the model sees room to run.

24/7 Wall St. Price Target Summary

Our proprietary model rates confidence high on Microsoft, with implied upside north of 22% over the next twelve months. That is a base case built on the assumption that Azure, Copilot, and the commercial backlog continue converting into revenue at the current pace.

Azure Crosses $100 Billion, and the Backlog Explodes

Microsoft closed fiscal 2026 with $331 billion in annual revenue, up 18%, and Azure crossed $100 billion in annual revenue for the first time, growing 41%. Q4 revenue of $90.01 billion beat consensus, and non-GAAP EPS of $4.74 beat by 11.81%, extending the beat streak to five quarters. Commercial RPO jumped 84% to $678 billion. Microsoft 365 Copilot reached over 30 million paid seats.

Shares are up 21.2% over the past month but down 2.98% in the past week, and roughly flat year to date at 0.12%. Recent headlines about Microsoft's Maia 300 chip targeting Nvidia's AI dominance have added a vertical-integration narrative to the software story.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.

Why Bulls See a Breakout Ahead

Azure guidance implies approximately 45% constant-currency growth in Q1 FY27, RPO is still growing 18% excluding OpenAI, and Copilot net seat adds more than doubled quarter over quarter.

Nadella said "I've never been more confident in Microsoft's opportunity to drive durable long-term growth." Morningstar has publicly argued the stock is worth $600. Our bull-case scenario points to $614.60.

What Could Go Wrong

Full-year capex hit $115.95 billion, up 79.62%, and full-year free cash flow fell to $66.99 billion, down 6.46%. Bears flag rising OpenAI investment losses ($3.1 billion in Q1 FY26), Xbox weakness, and the fact that AI capex hinges on demand holding up.

Bulls counter that Amy Hood explicitly said Microsoft can stagger data-center build-outs and delay GPU installations if demand shifts, and operating margins were guided to decline less than a point. Our bear case lands at $507.41, above today's price.

How Microsoft Compares to Nvidia and Alphabet

Nvidia is the obvious contrast. NVDA trades at a forward P/E of 25, with quarterly revenue growth of 85.2% and a 65.6% operating margin. Microsoft's 45.1% operating margin is lower, but its revenue is $331.8 billion versus Nvidia's $253.5 billion, and recurring. That subscription mix is what our model rewards.

Alphabet (NASDAQ:GOOGL) is the cheaper cloud comp at a forward P/E of 17 with a 54.8% profit margin. That makes Microsoft look expensive against GOOGL but reasonable against NVDA, and our $590.43 target sits between the two implied ranges.

Microsoft Price Prediction 2026-2030

The 24/7 Wall St. price target is $590.43, the recommendation is buy, and confidence is 90%. The tipping factor is the backlog: $678 billion in contracted commercial revenue turns AI capex into a return-on-investment question with visibility.

The bull thesis rests on Azure's 41% growth and Copilot's 30 million paid seats sustaining runway for several more years. The risk case centers on enterprise AI budgets compressing in 2027 and free cash flow continuing to decline.

These projections assume Microsoft continues executing on Azure, Copilot, and enterprise AI monetization. Significant upside or downside could come from AI demand normalization, regulatory action, or the pace of first-party silicon adoption.

The other side of that buildout is the power, cooling, and networking suppliers feeding the data centers, which we profiled in a free report here: 7 Stocks Powering the AI Boom (That Aren't Chipmakers).

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.

Contact editorial@247wallst.com for any questions or corrections.