Stifel Securities upgraded Microsoft Corp. from Hold to Buy and raised its price target to $575, up from $530. The brokerage highlighted the company's ability to sustain revenue growth in the mid‑to‑upper‑teens range and projected an additional 200 to 300 basis points of upside for its Azure cloud segment.
Analysts led by Brad Reback said Microsoft has "clearly turned the corner" after the June‑quarter earnings release, pointing to a more sustained efficiency cadence across silicon, models and software. They noted that the need for aggressive large‑language‑model investment is abating as open‑weight models deliver comparable results at lower cost.
Microsoft reported that Copilot seats reached roughly 30 million in the fourth quarter, a gain of 10 million quarter‑over‑quarter, while Microsoft 365 subscriptions are approaching 500 million seats. The firm expects to generate free cash flow positivity by fiscal 2027.
Chief Financial Officer Amy Hood said the company cut "dock‑to‑live" times— the interval between hardware deployment and revenue generation—by more than 50% over the past year. Following a contract revision in April, Microsoft eliminated revenue‑share payments to OpenAI. It also extended the useful life of its assets to 25 years from the previous 15 years.
Stifel concluded that Microsoft is "getting back on track" and that earlier concerns about margin compression were "too negative." The upgrade reflects confidence that Azure growth, reduced AI research intensity and an accelerating contribution from OpenAI will support the outlook.
