Key Takeaways
- Benchmark Research launches MSFT coverage with Buy recommendation and $450 per share price objective
- MSFT shares have declined approximately 23% in the last three months, erasing more than $1 trillion in valuation
- Benchmark’s analyst contends that significant capital expenditure is warranted given existing cloud contract coverage
- The company’s ownership position in OpenAI carries an estimated valuation of $227 billion
- Microsoft revealed plans for $5.5 billion Singapore AI infrastructure expansion and is negotiating a $7 billion Texas energy facility partnership with Chevron
The past several months have proven challenging for Microsoft. Shares plummeted more than one-third during a six-month period, eliminating over $1 trillion from its market capitalization. However, signs of stabilization are emerging.
Benchmark Research analyst Yi Fu Lee launched coverage this Tuesday, assigning a Buy recommendation alongside a $450 price objective. The valuation derives from an 8.8x enterprise value-to-revenue multiple applied to the company’s anticipated 2027 revenue figures.
Lee’s fundamental thesis is straightforward: Microsoft controls an enormous repository of enterprise and consumer information, which powers its artificial intelligence offerings. The analyst describes the technology giant as the sector’s “true landlord.”
This data supremacy, according to Lee, underpins a long-range forecast exceeding 10% yearly revenue expansion and approximately 30% free cash flow margins — significantly above the current fiscal year projection of 21.8%.
The primary concern surrounding Microsoft currently involves its capital investments. Forecasts indicate the corporation will deploy over $100 billion this fiscal year, predominantly for data center construction. This figure has rattled certain shareholders.
Benchmark’s Defense of Microsoft’s Investment Strategy
Lee challenges this apprehension. His analysis indicates Microsoft has secured cloud agreements that span the majority of the purchased hardware’s operational lifespan. Put differently, the revenue stream justifying these expenditures is essentially guaranteed.
“We think it would be more concerning if Microsoft does not spend the cash today to add global capacity,” Lee wrote.
Microsoft shows no signs of deceleration. The corporation verified its commitment to deploy $5.5 billion toward cloud and artificial intelligence infrastructure in Singapore through 2029. This disclosure followed a previous day’s announcement of over $1 billion designated for Thailand.
Regarding power infrastructure, Bloomberg reports Microsoft is conducting negotiations with Chevron (CVX) and investment entity Engine No. 1 concerning a $7 billion electricity generation facility in Texas designed to power data center operations. The involved parties have not issued immediate statements.
OpenAI Investment Strengthens Bullish Outlook
Lee also highlighted Microsoft’s financial position in OpenAI as an undervalued component. His assessment places Microsoft’s current ownership in the ChatGPT creator at approximately $227 billion.
Despite OpenAI expanding its investor base, Lee anticipates the two organizations maintaining tight integration over the long term. He characterizes their connection as “symbiotic” — OpenAI requires a dependable cloud infrastructure provider, while Microsoft gains from hosting a premier AI platform.
Lee additionally outlined a substantial market landscape. His calculations position Microsoft’s total addressable market spanning software, cybersecurity, and vertical sectors at $730.5 billion for 2025, expanding to $1.25 trillion by 2030 at an 11.4% compound annual growth rate.
MSFT reached a peak above $450 in October 2025 preceding the decline. The stock has experienced modest recovery from recent nadirs near $360.
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