Microsoft's Backlog Just Became the Loudest Bull Argument on Wall Street
Published on 08/05/2026 at 07:32 | Redaktion boerse-global.de
When Goldman Sachs reshuffles its conviction list, the market tends to listen. But the move it made in early August 2026 was more than a routine portfolio adjustment — it was a signal that the AI trade has entered a new phase, one where promises no longer move share prices and delivery does.
The bank added Microsoft to its closely watched US Conviction List on August 4, 2026, while simultaneously dropping Broadcom and ServiceNow from the roster. The message was unambiguous: among hyperscalers, Microsoft has become the name that converts artificial intelligence spending into actual revenue.
The Numbers Behind the Endorsement
The stock's response was swift. Over seven trading sessions, shares climbed 25.41 percent to close at 427.60 euros, a move that added hundreds of billions to the company's market value. Goldman's price target of 488.47 euros implies further upside of roughly 14 percent from Tuesday's close.
The catalyst was a quarterly report that gave investors exactly what they had been demanding. Azure, Microsoft's cloud business, grew 43 percent year over year and crossed the 100 billion dollar annual revenue threshold for the first time — a milestone that has recently tripped up competitors like Meta and Alphabet.
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Copilot, the company's AI assistant, is also hitting its stride. Paid users doubled to 30 million, up from 20 million in April, signaling that the tool has moved past the experimentation phase and into corporate budgets as a line item.
A Backlog That Speaks Volumes
The most compelling evidence of Microsoft's momentum, however, sits beyond the quarterly numbers. Remaining Performance Obligations — the contracted revenue commitments from customers — surged 84 percent to 678 billion dollars. That figure suggests the current demand for cloud and AI services is not a short-term spike but a structural shift in how companies allocate technology spending.
That growth comes at a cost. Capital expenditures for the fourth quarter reached 41 billion dollars, up 70 percent from the prior year. For the full fiscal year 2026, spending totaled 115.95 billion dollars. Free cash flow has taken a hit as a result, yet the market appears willing to accept the trade-off in exchange for a leadership position in AI infrastructure.
Management is signaling the spending spree is far from over. The company has guided to roughly 45 percent Azure growth for the first quarter of fiscal 2027, suggesting the acceleration still has room to run.
The Chart Tells a Different Story
For all the fundamental strength, the technical picture has become stretched. The 14-day RSI sits at 78.5 — a reading that traditionally flags an overbought condition. The stock now trades 23.36 percent above its 50-day moving average, a testament to the ferocity of the recent advance.
Over the past 30 days, the stock is up 27.47 percent, while the trailing twelve-month return remains negative at minus 6.93 percent. That contrast underscores how much of the rally has been about reclaiming lost ground rather than breaking new highs. The stock still sits roughly 10 percent below its October 2025 record.
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The annualized volatility over the past month has climbed to 52.61 percent — an unusually rapid pace even by technology sector standards. A consolidation phase after such a sharp move would hardly be surprising.
Lingering Questions
Not everything is resolved. A class-action lawsuit tied to the slower Azure growth reported in January 2026 continues to circulate, though the latest quarterly figures suggest Microsoft has successfully worked through its earlier capacity constraints.
The broader narrative around the so-called Magnificent Seven has shifted decisively. The question is no longer whether AI can generate revenue, but which companies can actually deliver it. With a 678 billion dollar backlog, a doubling Copilot user base, and Azure accelerating past the 100 billion dollar mark, Microsoft has made a compelling case that it belongs at the front of that line — even if the chart suggests the market may need a moment to catch its breath.
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