UBS reduced its price target on Microsoft (NASDAQ:MSFT) to $480 from $510 while maintaining a Buy rating, as the tech giant signals a shift in its data center investment strategy ahead of its upcoming earnings report on April 30.
Following Microsoft’s recent disclosure that it is scaling back or pausing some early-stage data center projects, UBS assessed the broader implications. The firm believes the changes are likely not tied to weakening AI demand but rather part of a recalibration of infrastructure planning. It expects Microsoft to reaffirm fiscal 2026 capital expenditure growth guidance—albeit at a slower pace than fiscal 2025.
The report also notes that any resulting capacity constraints, particularly those involving Microsoft’s AI partner OpenAI, could be mitigated through collaboration with other cloud providers such as Oracle. Despite the adjustment, UBS maintains a positive long-term outlook for Microsoft, citing its leadership in AI and cloud services.