July 9 - Oppenheimer upgraded Microsoft (MSFT, Financial) to Outperform from Perform and kept its price target at $600.
Shares of Microsoft edged up about 1% on the news.
Analyst Brian Schwartz said Microsoft's ramping AI revenue, driven by Azure growth, remains underappreciated. He noted that as AI services scale, they could underpin valuation in a manner similar to Amazon Web Services for Amazon.
Schwartz added that Microsoft is among a select few software firms capable of delivering a “Rule of 60” business profile—where revenue growth plus free‑cash‑flow margin exceeds sixty percent—at unprecedented scale. He argued this mix supports premium multiples.
While first‑half Azure growth has been strong, Oppenheimer believes the market may be too cautious about the potential of Copilot Studio and other AI initiatives. The firm sees durable upside if Microsoft can reaccelerate Azure growth in fiscal 2026.
Market participants will watch upcoming quarterly results for signs that AI revenue is tracking toward Oppenheimer's thesis. The upgrade underscores growing analyst confidence in Microsoft's long‑term role as a major AI winner.
