Microsoft (MSFT) just got a big boost from Wall Street after releasing stellar results for the fiscal fourth quarter. KeyBanc analyst Jackson Ader upgraded the tech giant’s rating to Buy from Hold and set a new price target of $630, implying over 20% upside from current levels.
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This reverses Ader’s earlier rating downgrade in April, due to concerns over rising capital expenditures, depreciation costs, and MSFT’s ability to maintain margins while scaling its AI infrastructure. Microsoft’s latest earnings report, which beat analysts’ expectations, helped overcome these doubts.
Analyst bullish on Microsoft Azure Growth
The analyst noted that Microsoft Azure’s revenue growth increased to 39% in Q4 from 31% in the previous quarter, which points to strong demand for cloud services. Further, Microsoft laid off over 10,000 employees, which shows cost discipline and a focus on protecting margins.
Importantly, Ader said that no major macro headwinds were mentioned during the Q4 earnings call, which helped ease investor concerns.
Lastly, Azure’s explosive growth is the key reason behind Microsoft’s bullish outlook. According to Ader, the platform’s strong momentum has made previous debates about AI return-on-investment and infrastructure costs “all but irrelevant.”
Not Just KeyBanc
Following the release of MSFT’s Q4 results, several other analysts are bullish about the stock’s prospects. Nearly 20 analysts have raised their price target on the stock and reiterated a Buy rating.
It must be noted that Wolfe Research analyst Alex Zukin increased the target to a new street high of $675 (26.5% upside) from $600. He also has maintained a Buy rating on Microsoft stock.
Is MSFT Stock a Buy?
Turning to Wall Street, MSFT stock has a Strong Buy consensus rating based on 33 Buys and two Holds assigned in the last three months. At $611.28, the average Microsoft stock price target implies 14.5% upside potential.
