Microsoft’s (MSFT) Fairwater AI data centers — which started going online in 2025 — are likely to boost growth for the tech giant’s Azure unit, UBS said.
“Importantly, we did not pick up evidence of material go-live delays and all partners confirmed that Fairwater Wisconsin would begin going live in early 2026,” UBS analyst Karl Keirstead wrote in a note to clients. “Although estimates varied, the consensus was to bring the data center online in 50 MW chunks, with 100 MW by the end of Feb., 200 MW by the end of March and 400 MW by the end of June, and 500 MW by the middle of the summer.”
Keirstead continued: “Bottom line, our work led us to the conclusion that our Azure growth estimates established post the 1Q/Sept print are too conservative, and for the 4Q/Jun 2026 quarter, we’re raising our c/c Azure growth estimate from 35% to 37%. Given the magnitude of GPU capacity coming online throughout 2026, we also conclude that Street capex estimates for FY27 are likely biased up.”
Keirstead reiterated his Buy rating on Microsoft, but lowered his price target to $600 from $650.
Microsoft is set to report fiscal second-quarter results after the close of trading on Jan. 28.
