Microsoft (MSFT) stock gained 2% on Wednesday after the market opened after Stifel upgraded the technology giant to Buy from Hold and raised its price target to $575 from $530.
The new target implies around 15% upside from Tuesday’s close.
Stifel said Microsoft’s artificial intelligence initiatives, Azure growth and Microsoft 365 Copilot adoption could support stronger revenue growth and operating performance.
Microsoft shares have faced pressure over the past year as the company’s capital expenditure has increased to meet infrastructure requirements for Azure and its investments in AI assistant Copilot.
The stock is down 0.21% over the past 12 months, although it has gained 32% over the past six months.
Stifel sees stronger growth from Azure and Copilot
Stifel analyst Brad Reback said the firm is increasingly confident that Microsoft can sustain mid-to-upper-teens revenue growth.
“We are increasingly comfortable with the company’s ability to sustain mid/upper teens revenue growth as open-weight model advancement has boosted management’s [large language model] agnostic strategy (Azure & Copilot),” Reback said in a note to clients on Tuesday.
He added that operational efficiencies could support stable operating margins, while strong cash flow could reduce Microsoft’s need for external financing.
For Microsoft 365, Reback said product improvements could support continued Copilot adoption.
He also pointed to growing GitHub consumption as a potential contributor to mid-to-upper-teens growth.
Stifel’s upgrade follows concerns earlier this year about Microsoft’s gross margins and the impact of its rising AI-related spending.
“Post our gross-margin concerns earlier this year, it is now increasingly evident that Azure operational efficiency efforts… disciplined capex spending and focused opex growth should enable Microsoft to sustain current operating-margins,” Reback wrote.
Oppenheimer also raises Microsoft price target
Stifel’s upgrade follows a separate price-target increase from Oppenheimer, which raised its target for Microsoft to $570 from $515 while maintaining an Outperform rating.
The increase followed a meeting with Microsoft management at the company’s headquarters.
Oppenheimer analyst Brian Schwartz said management’s tone was positive regarding demand, Microsoft’s structural advantages in AI and the durability of its competitive position.
The firm maintained its “acceleration with capital discipline” thesis, pointing to strong growth and usage across Azure and Microsoft 365 Commercial.
Oppenheimer also said Copilot monetization remained strong while Microsoft continued adding computing capacity to meet AI demand.
The firm said customers were increasingly standardizing on Microsoft as their primary enterprise AI platform.
Analysts remain broadly positive on Microsoft
Oppenheimer also highlighted efficiency gains and capital discipline.
It said Microsoft’s capital spending had become more predictable while the company remained free cash flow positive.
Microsoft executives told Oppenheimer they expected to sustain profitable growth despite ongoing computing capacity constraints and concerns about AI disruption.
However, Oppenheimer identified potential risks, including AI disruption and a pull-forward of enterprise IT spending in the second half of 2026.
Those factors could moderate Azure and Microsoft 365 Commercial revenue growth heading into 2027.
The firm also flagged the possibility of cloud-margin compression or weaker capital expenditure efficiency.
Other firms have also raised their targets. Cantor Fitzgerald recently lifted its price target to $608 from $522, citing strong growth fundamentals and steady capital expenditure guidance. Citizens reiterated its Market Outperform rating with a $550 target.
The analyst upgrades are broadly aligned with Wall Street sentiment. LSEG data shows that 57 of the 60 analysts covering Microsoft have a Buy or Strong Buy rating.