Microsoft Stock Discount May Be Ending as AI Catalysts Build

Summary

Just over six months ago, Microsoft Corp. NASDAQ: MSFT was trading at an all-time high of over $542. At that time, many analysts were whispering that many technology stocks were overvalued. Microsoft Today$418.57 0.00 (0.00%) As of 05/22/2026 04:00 PM Eastern52-Week Range$356.28▼$555.45Dividend Yield0.87%P/E Ratio24.91Price Target$560.88 So, it shouldn’t come as much of a surprise that MSFT is down from those lofty heights. However, there weren’t many analysts who expected to get this kind of discount on MSFT. In fact, at the beginning of April, the stock was trading at around $357, erasing all its gains over a 12-month period.Get Microsoft alerts:Sign Up Although MSFT is up nearly 5% in the last three months, even a strong earnings report wasn't enough to sustain upward momentum. Included in that report was the announcement that Microsoft's AI business has reached an annual revenue run rate of $37 billion, up 123% from a year ago. It was the first time the company had updated the figure since reporting a $13 billion run rate in January 2025. The News May Be Turning in Microsoft’s FavorWith earnings season in the rearview mirror, investors are left with a rare disconnect between a company that’s performing well based on fundamentals and a stock price that may offer a compelling entry point. However, that means that investors still can get MSFT at an attractive valuation. The stock is trading at around 25x forward earnings. That’s about 30% below its five-year median average of 34x. Here are three catalysts that could make that happen. First, the OpenAI deal restructure, which was announced days before earnings, ended Microsoft's revenue share payments to OpenAI while locking in IP rights through 2032 and allowed OpenAI to serve customers across any cloud provider. Wedbush's Daniel Ives called the restructure a "net positive," raising his price target to $575, and flagged that Microsoft will now receive roughly $6 billion from OpenAI in 2026, compared to the $4 billi...