Melius Sees $665 Potential for Microsoft on AI Security Demand

Microsoft Corporation (NASDAQ:MSFT) is gaining attention after Melius upgraded its stock rating to Buy from Hold and set a price target of $665.

Analyst Ben Reitzes highlighted the growing demand for AI security and governance solutions among enterprises. He noted that Microsoft’s stock has climbed around 40% since its June low of $353, now trading near its 52-week high of $553.72. Melius also adjusted its earnings estimates, raising fiscal 2027 forecasts by 2% and fiscal 2028 by 4%, while initiating a fiscal 2029 estimate of $30.77 per share, 7% above consensus. The $665 target reflects approximately 22 times that fiscal 2029 estimate.

The firm anticipates Azure’s growth to exceed 50% by the fourth quarter of fiscal 2027, as businesses prioritize secure systems for AI models and agents over direct reliance on AI labs. This upgrade follows recent warnings from AI executives about AI risks, which have sparked immediate interest in Microsoft’s security offerings among enterprise resellers.

Additionally, Microsoft announced the departure of Ryan Roslansky, the executive vice president overseeing M365 apps and former LinkedIn CEO. Meanwhile, Piper Sandler increased its price target on the stock, citing growth in Copilot and Cowork, while maintaining an Overweight rating. Microsoft is scheduled to report first-quarter fiscal 2027 results later this month, with its Ignite conference planned for mid-November.