TLDR
- Morgan Stanley boosted Microsoft’s price target from $582 to $625 with Overweight rating
- Investment bank replaced Atlassian with Microsoft as top large-cap software pick
- Analyst sees 23.3% upside potential driven by AI, cloud migration, and cybersecurity leadership
- Stock trades at attractive 26x forward earnings versus 32x sector average
- Wall Street maintains Strong Buy consensus with 33 Buy ratings
Morgan Stanley analyst Keith Weiss lifted his price target for Microsoft stock to $625 from $582 while keeping an Overweight rating. The move positions Microsoft as the firm’s new “Top Pick” in large-cap software.
Weiss dropped Atlassian from the top spot, choosing Microsoft for its “clearest and highest probability positive risk/reward” profile. The analyst believes multiple growth catalysts support the tech giant’s outlook.
The new price target implies 23.3% upside from current levels. Microsoft shares have already climbed over 20% year-to-date, outpacing many technology peers.
AI and Cloud Growth Drive Optimism
Microsoft’s leadership in artificial intelligence markets has caught Wall Street attention. Recent surveys show the company capturing the largest wallet share gains in generative AI spending.
The enterprise cloud migration trend continues benefiting Microsoft’s Azure platform. Businesses moving workloads to public cloud infrastructure support the division’s growth trajectory.
Microsoft dominates cybersecurity with over $40 billion in annual revenues. This market position strengthens as companies increase security spending across digital infrastructure.
Valuation Looks Attractive
Weiss argues Microsoft trades at a discount to software peers. The stock carries less than 26x GAAP 2027 earnings compared to the sector’s 32x non-GAAP average.
The analyst thinks investors undervalue Microsoft’s ability to deliver consistent high-teens returns. This performance durability makes the stock appealing for institutional portfolios.
Morgan Stanley expects sustained revenue momentum and better recognition of growth drivers. The firm anticipates resolution of uncertainty around Microsoft’s OpenAI partnership.
OpenAI Relationship Clarified
Some market participants worried about OpenAI’s recent Oracle deal impacting Microsoft. Weiss views this development as potentially positive rather than concerning.
The Oracle contract may reflect Microsoft’s capacity constraints, not competitive losses. It could also show preference for higher-margin enterprise customers over consumer applications.
Azure’s growth doesn’t depend solely on OpenAI relationships. The platform serves diverse customers across multiple industries and use cases.
Weiss ranks among the top 300 analysts tracked by TipRanks. He maintains a 64% success rate with 13.1% average returns per rating over one year.
Wall Street consensus remains bullish on Microsoft prospects. The stock carries 33 Buy recommendations against just one Hold rating from analysts.
Average price targets across Wall Street reach $626.88, closely matching Morgan Stanley’s new $625 target. This suggests broad agreement on valuation methodology.
Microsoft currently trades at $507.03 with a $3.77 trillion market capitalization. The company recently announced Xbox console price increases and expanded AI capabilities through new partnerships.
