Microsoft Upgraded to Buy on AI Growth Prospects

Microsoft (MSFT) received a bullish upgrade from Melius Research, with analyst Ben Reitzes raising the stock to 'Buy' from 'Hold' and setting a price target of $665. Reitzes argued that concerns over AI risks could make leaders like Microsoft and cybersecurity firms increasingly vital. The analyst noted that enterprises are investing in secure wrappers to manage AI models effectively.

Scotiabank also boosted its price target on Microsoft to $615 from $510, maintaining an 'Outperform' rating. The firm highlighted Microsoft's role as a key player in the enterprise AI revolution, especially with OpenAI's recent business-to-business push.

Wells Fargo recently increased its price target to $725 from $700 and added Microsoft to its Q4 'Tactical Ideas list.' Analyst Michael Turrin cited Microsoft's AI advantage, the upcoming Ignite conference, and new segment reporting as key catalysts. Wells Fargo also noted a shift in momentum back toward Microsoft among mega-cap technology companies.

Microsoft's strong performance in cloud services and AI continued to drive growth. The company reported that Azure and other cloud services revenue grew 43% year over year in the fiscal fourth quarter. Additionally, Microsoft 365 Copilot surpassed 30 million paid seats, with net seat additions more than doubling quarter over quarter.