Stifel Upgrades Microsoft to Buy on Azure and Copilot Growth

Stifel has upgraded Microsoft to Buy from Hold, citing the company's strong growth prospects driven by its cloud computing business Azure and AI-powered Copilot product. Analyst Brad Reback believes that operational efficiencies, new datacenter capacity, and a growing revenue share from OpenAI will contribute to sustained mid-to-upper teens revenue growth.

Reback points out that Microsoft's position as an open-weight model advancement has strengthened its strategy of staying agnostic across large language models within Azure and Copilot. He also expects product improvements in Microsoft 365 to boost Copilot adoption, while rising GitHub consumption will add another layer of support to the growth target.

The company is already reporting revenue growth of 17.79% for the last twelve months, with estimates calling for a further 18% growth in the coming months. Stifel's upgrade and price target of $575 from $530 imply roughly 15% upside from Tuesday's close.