TLDR
- Microsoft won a $170.44 million Air Force contract to provide Azure cloud services through the Cloud One Program until December 2028.
- The sole source award covers work at Microsoft facilities nationwide with $1.94 million in initial funding from fiscal 2026 budgets.
- MSFT stock dropped 20% from its October peak, wiping out more than $700 billion in market capitalization.
- Citigroup, Mizuho, and TD Cowen reduced price targets on Microsoft shares in recent days.
- Azure delivered 40% revenue growth in the September quarter, surpassing Wall Street projections.
The U.S. Air Force awarded Microsoft a $170.44 million contract on January 21, 2026. The Department of Defense announced the firm-fixed-price task order for cloud services.
Microsoft will provide Azure cloud offerings to the Air Force’s Cloud One Program. The contract runs through December 7, 2028 with work at company facilities across the United States.
The Air Force Life Cycle Management Center issued the award as a sole source acquisition. No competitive bidding occurred for this contract.
Fiscal year 2026 operations and maintenance funds totaling $1.94 million were committed at award. The complete contract value reaches $170.44 million over the nearly three-year period.
Cloud One operates as the Air Force’s enterprise cloud computing platform. It supports communication and cloud capabilities for military mission applications across U.S. forces.
Amazon Web Services, Google Cloud, and Oracle also serve as Cloud One vendors. Multiple providers support different aspects of the Air Force’s cloud infrastructure needs.
Stock Faces Persistent Selling Pressure
Microsoft shares declined in six of the last seven trading sessions. The stock now sits approximately 20% below its October 28 high.
Company market capitalization dropped from above $4 trillion in October to $3.3 trillion. Shares fell 2.3% on January 21 while broader indexes rallied.
Markets gained that day after President Trump reversed Greenland tariff plans. Microsoft stock ignored the positive market momentum and continued lower.
Wall Street firms adjusted their outlooks on MSFT shares. Citigroup, Mizuho, and TD Cowen each lowered price targets recently.
Analyst Ratings Stay Positive
Koyfin data shows 56 of 58 analysts maintain buy or stronger ratings. The remaining two analysts recommend holding the stock.
Average analyst price targets stand at $622.20 per share. This represents about 40% potential upside from recent closing prices.
Retail investor sentiment weakened on Stocktwits since the prior Friday. The sentiment gauge remained in bullish territory as of late Wednesday.
Microsoft’s Azure cloud division posted 40% growth during the September quarter. Results exceeded analyst expectations for the period.
Government Cloud Portfolio Expands
The Air Force contract strengthens Microsoft’s federal customer base. Azure continues building presence with government agencies and defense organizations.
Microsoft performs all Cloud One work at designated U.S. facilities. The company operates multiple data centers and service locations nationwide.
The Air Force Life Cycle Management Center handles contract administration. This office manages procurement and oversight for Air Force technology projects.
Initial contract funding of $1.94 million covers immediate operational costs. Additional funds will be obligated throughout the contract’s duration as services are delivered.
