We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Microsoft a Buy After Expanding Its NVIDIA Partnership?
Microsoft is strengthening its position in artificial intelligence after expanding its collaboration with Nvidia and introducing a new generation of AI-powered Windows PCs.
On Wednesday, Microsoft unveiled pricing and availability details for its Surface Laptop Ultra, powered by Nvidia's RTX Spark chip, which enables developers and consumers to run AI models directly on their devices rather than relying entirely on cloud infrastructure.
Starting at $2,599, the new laptop will become available on October 16, alongside Nvidia-powered AI PCs from Dell, HP, Lenovo, and other manufacturers.
Additionally, Microsoft announced the Nvidia-powered Surface RTX Spark Dev Box, designed for developers and AI engineers working with advanced models, which is expected to ship in November at a starting price of $5,999.
The collaboration could help Microsoft capture additional demand for AI-enabled computing while strengthening its Windows and Surface ecosystems.
Microsoft's Growth Outlook Remains Strong
Microsoft's growth trajectory remains encouraging, supported by expanding demand for Azure cloud services, enterprise AI applications, and its Microsoft 365 Copilot offerings.
During its most recent fiscal fourth quarter, Microsoft reported revenue of $90 billion, up 18% year over year, while adjusted earnings climbed 23% to $4.74 per share.
Looking ahead, the Zacks Consensus Estimate calls for Microsoft's current fiscal 2027 revenue to climb 17% to $390.2 billion, with earnings expected to increase 9% to $19.65 per share. Furthermore, FY28 sales and EPS are each projected to rise another 18%, highlighting the company's favorable longer-term growth prospects.
Tracking Microsoft’s EPS Revisions
Although Microsoft’s growth outlook remains strong, earnings estimate revisions have been largely unchanged.
The FY27 EPS consensus is slightly up in the past 60 days from $19.63 to $19.65, while FY28 estimates have dipped from $23.30 to $23.24. This suggests analysts remain confident in Microsoft's growth outlook but have yet to become more bullish on its near-term earnings trajectory.
Microsoft's Premium Valuation
At current levels, Microsoft stock trades at 27X forward earnings, well above its Zacks Computer-Software industry's average of 16X and at a slight premium to the benchmark S&P 500.
This premium reflects Microsoft's leadership in cloud computing, recurring enterprise software revenue, and expanding AI opportunities. Still, elevated expectations leave shares vulnerable to volatility if Azure growth slows or the company's substantial AI infrastructure investments pressure profitability.
Bottom Line
Microsoft's expanded Nvidia collaboration adds another catalyst to its compelling long-term AI growth story. However, MSFT shares are up a respectable but relatively modest 9% year to date, suggesting investors may be gravitating toward other high-growth opportunities with stronger near-term momentum.
Combined with its premium P/E valuation and relatively stagnant earnings estimate revisions, Microsoft stock currently lands a Zacks Rank #3 (Hold), with MSFT being more appealing as a long-term holding than an aggressive near-term buy.
Free: Instant Access to Zacks' Market-Crushing Strategies
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can tap into those powerful strategies – and the high-potential stocks they uncover – free. No strings attached.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
View the Zacks #1 Rank List
Image: Bigstock
Zacks Investment Ideas feature highlights: Microsoft, Dell, HP, Lenovo and Nvidia
For Immediate Release
Chicago, IL – October 9, 2026 – Today, Zacks Investment Ideas features Microsoft (MSFT - Free Report) , Dell (DELL - Free Report) , HP (HPQ - Free Report) , Lenovo (LNVGY - Free Report) and Nvidia (NVDA - Free Report)
Is Microsoft a Buy After Expanding Its NVIDIA Partnership?
Microsoft is strengthening its position in artificial intelligence after expanding its collaboration with Nvidia and introducing a new generation of AI-powered Windows PCs.
On Wednesday, Microsoft unveiled pricing and availability details for its Surface Laptop Ultra, powered by Nvidia's RTX Spark chip, which enables developers and consumers to run AI models directly on their devices rather than relying entirely on cloud infrastructure.
Starting at $2,599, the new laptop will become available on October 16, alongside Nvidia-powered AI PCs from Dell, HP, Lenovo, and other manufacturers.
Additionally, Microsoft announced the Nvidia-powered Surface RTX Spark Dev Box, designed for developers and AI engineers working with advanced models, which is expected to ship in November at a starting price of $5,999.
The collaboration could help Microsoft capture additional demand for AI-enabled computing while strengthening its Windows and Surface ecosystems.
Microsoft's Growth Outlook Remains Strong
Microsoft's growth trajectory remains encouraging, supported by expanding demand for Azure cloud services, enterprise AI applications, and its Microsoft 365 Copilot offerings.
During its most recent fiscal fourth quarter, Microsoft reported revenue of $90 billion, up 18% year over year, while adjusted earnings climbed 23% to $4.74 per share.
Looking ahead, the Zacks Consensus Estimate calls for Microsoft's current fiscal 2027 revenue to climb 17% to $390.2 billion, with earnings expected to increase 9% to $19.65 per share. Furthermore, FY28 sales and EPS are each projected to rise another 18%, highlighting the company's favorable longer-term growth prospects.
Tracking Microsoft’s EPS Revisions
Although Microsoft’s growth outlook remains strong, earnings estimate revisions have been largely unchanged.
The FY27 EPS consensus is slightly up in the past 60 days from $19.63 to $19.65, while FY28 estimates have dipped from $23.30 to $23.24. This suggests analysts remain confident in Microsoft's growth outlook but have yet to become more bullish on its near-term earnings trajectory.
Microsoft's Premium Valuation
At current levels, Microsoft stock trades at 27X forward earnings, well above its Zacks Computer-Software industry's average of 16X and at a slight premium to the benchmark S&P 500.
This premium reflects Microsoft's leadership in cloud computing, recurring enterprise software revenue, and expanding AI opportunities. Still, elevated expectations leave shares vulnerable to volatility if Azure growth slows or the company's substantial AI infrastructure investments pressure profitability.
Bottom Line
Microsoft's expanded Nvidia collaboration adds another catalyst to its compelling long-term AI growth story. However, MSFT shares are up a respectable but relatively modest 9% year to date, suggesting investors may be gravitating toward other high-growth opportunities with stronger near-term momentum.
Combined with its premium P/E valuation and relatively stagnant earnings estimate revisions, Microsoft stock currently lands a Zacks Rank #3 (Hold), with MSFT being more appealing as a long-term holding than an aggressive near-term buy.
Free: Instant Access to Zacks' Market-Crushing Strategies
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can tap into those powerful strategies – and the high-potential stocks they uncover – free. No strings attached.
Get all the details here >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.