Microsoft (NASDAQ:MSFT) is back in the headlines after announcing another wave of layoffs—this time slashing 9,000 jobs. While the move might raise eyebrows, many investors see it as a calculated strategy to deepen Microsoft’s investment in artificial intelligence. With AI transforming every corner of the tech sector, the MSFT stock forecast could hinge on how well the company executes its AI vision.
Let’s explore what this means for investors.
Why Microsoft Is Laying Off 9,000 Employees
A Microsoft spokesperson explained the layoffs were part of “organizational changes necessary to best position the company and teams for success in a dynamic marketplace.” This marks at least the fourth wave of job cuts in 2025, following layoffs in January, May, and June.
While painful for affected workers, the cuts may free up resources for Microsoft to hire top AI talent, build infrastructure, and outpace rivals. Companies like Meta Platforms (NASDAQ:META) and Alphabet (NASDAQ:GOOGL) are aggressively recruiting in the AI space. Microsoft may be following suit, redirecting funds to scale up its artificial intelligence capabilities.
MSFT Stock Forecast: Strong Fundamentals Back the Bull Case
Despite workforce reductions, Microsoft’s fundamentals remain rock solid. The company has been a consistent performer, and its earnings continue to exceed Wall Street expectations.
In its most recent quarter, Microsoft reported:
Revenue: $70.1 billion (up 13.3% YoY)
Earnings per share (EPS): $3.46 (vs. $3.22 expected)
Operating cash flow: $37 billion
Cash reserves: $28.8 billion, with no short-term debt
This kind of balance sheet gives Microsoft plenty of flexibility—whether for R&D, acquisitions, or hiring top-tier AI engineers.
Looking ahead, analysts expect fiscal Q4 EPS of $3.35, up 13.6% from last year. Full-year EPS is projected at $13.36, an increase of 13%. These figures support a bullish MSFT stock forecast, especially if Microsoft continues to dominate in cloud and AI.
Azure, AI, and the Cloud Power Microsoft’s Growth
At the heart of Microsoft’s growth engine is its cloud platform, Azure. According to Wedbush analyst Dan Ives, Azure remains central to enterprise AI adoption globally. That’s not just analyst talk—the numbers back it up.
Microsoft Cloud revenue climbed 20% to hit $42.4 billion last quarter, highlighting the strength of its ecosystem. Azure is increasingly becoming the go-to cloud platform for AI deployment, offering scalability and integration with Microsoft tools already in use across industries.
The company’s partnership with OpenAI has also reshaped Bing and other Microsoft services. AI is being used to improve search relevance, increase ad revenue, and create more personalized user experiences—all of which help drive future earnings.
Analyst Consensus: Is MSFT Stock a Buy?
Wall Street is still very bullish on Microsoft. Out of 46 analysts:
37 rate MSFT a “Strong Buy”
5 call it a “Moderate Buy”
4 recommend “Hold”
The average price target is $528.88, suggesting about 6.5% upside from current levels. With consistent earnings, growing AI integration, and a powerful cloud business, the MSFT stock forecast remains bright.
Final Thoughts: A Strategic Reset with Long-Term Upside
Microsoft’s decision to cut 9,000 jobs may look harsh on the surface, but investors should view it through a long-term lens. In a rapidly evolving tech landscape, reallocating capital toward AI, cloud services, and innovation is likely to boost shareholder value.
If you’re looking for a high-quality tech stock with reliable growth and exposure to AI, Microsoft deserves a spot on your watchlist.
If you’re already holding MSFT stock, staying the course could be wise. For new investors, any short-term dip from layoff news may offer a buying opportunity. As Microsoft leans further into AI and cloud computing, its long-term growth trajectory remains intact. The MSFT stock forecast continues to favor patient, long-term holders.
Featured Image: Pixabay©efes
