Stifel Upgrades Microsoft Stock to Buy on Improved Azure Outlook
Microsoft shares rose in premarket trading on Wednesday after Stifel upgraded its rating to Buy from Hold and raised its price target to $575 from $530.
The upgrade centers on improving Azure growth, better operating efficiency, and growing confidence that Microsoft can sustain mid-to-upper-teens revenue growth despite capacity constraints in its cloud business.
According to Stifel analyst Brad Reback, the company's ability to sustain this level of growth is becoming increasingly comfortable due to advancements in open-weight models, which have boosted management's LLM agnostic strategy (Azure & Copilot).
The Azure outlook appears central to the upgrade. Reback expects cloud revenue growth to accelerate despite limited available computing capacity.