Stifel reiterates Microsoft stock Hold rating on lease accounting

Investing.com - Stifel maintained a Hold rating and $415.00 price target on Microsoft Corporation (NASDAQ:MSFT) shares, slightly above the current trading price of $411.38. InvestingPro analysis suggests the stock remains undervalued, with a Fair Value indicating potential upside.

The firm noted that Microsoft’s "leases not yet commenced" balance reached $196.6 billion as of March 31, 2026, more than doubling in the past nine months. This figure represents committed leases that will affect future financial statements.

Microsoft and other cloud vendors have increasingly used finance leases for AI-cloud infrastructure buildout, unlike earlier CPU-cloud deployments. The company has deployed this approach given the size, scale and rapid growth in demand for AI-cloud workloads.

Finance leases improve reported operating income and traditional free cash flow based on how costs appear on the income statement and cash flow statement. Microsoft generated $72.9 billion in levered free cash flow over the last twelve months. The approximately $200 billion in finance leases are expected to commence over the next five years.

These leases will have a material impact on interest expense, potentially creating a headwind to earnings per share growth, according to Stifel. Notably, 17 analysts have recently revised their earnings estimates downward for the upcoming period, according to InvestingPro Tips. For deeper insights into Microsoft’s financial outlook, investors can access the comprehensive Pro Research Report, available for this and 1,400+ other US equities.

In other recent news, OpenAI announced the release of GPT-5.5 Instant, an upgraded model for ChatGPT that offers improved accuracy and more concise responses. The company reported a 52.5% reduction in hallucinated claims compared to its previous version, GPT-5.3 Instant, particularly in high-stakes areas such as medicine, law, and finance. Meanwhile, Anthropic launched ten agent templates for financial services tasks, integrating Claude with Microsoft Excel, PowerPoint, Word, and Outlook through Microsoft 365 add-ins. This integration allows for seamless context transfers between applications.

Additionally, Microsoft, alongside Google and xAI, has agreed to provide the U.S. government with early access to new AI models for national security risk assessments. This initiative will allow the Center for AI Standards and Innovation at the Department of Commerce to evaluate these models before public deployment. KeyBanc has reiterated its Overweight rating on Microsoft stock, maintaining a $600 price target, as it continues to monitor Azure capacity, Copilot adoption, and capital expenditures. Furthermore, OpenAI explored the possibility of spinning off its robotics and consumer-hardware divisions in late 2025, according to a Wall Street Journal report, though the proposal was ultimately rejected.

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