As the AI race heats up, investors are starting to question whether Microsoft (MSFT) is keeping pace with rivals, especially as adoption of its Copilot tools remains modest. A recent note from Bank of America analyst Tal Liani highlights these concerns, but keeps a positive view on the stock, pointing to Microsoft’s broader cloud and AI strategy.
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New trading tool for CRWV bullsCopilot Adoption Raises Questions
A key concern is the slower rollout of Microsoft’s Copilot tools. Investors noted that Copilot has reached about 15 million paid users, or roughly 3.5% of Microsoft 365’s commercial base. That is a modest number for a company of its size, raising questions about how quickly AI can drive growth.
At the same time, competition is rising. Players like OpenAI, Anthropic, and Alphabet (GOOGL) are scaling quickly, adding to concerns about Microsoft’s position.
Cloud and OpenAI in Focus
There are also questions around Microsoft’s cloud business. The company has been shifting some compute toward internal use instead of selling it through Azure, which has slightly limited growth. This has raised debate over whether the issue is supply limits or uneven demand.
Another point of focus is Microsoft’s link to OpenAI. About half of its infrastructure is used internally, while the rest supports external users like OpenAI. Any slowdown in OpenAI’s growth could weigh on cloud demand, though capacity can be redirected if needed.
Why BofA Still Sees Strength
Despite these concerns, BofA believes Microsoft remains well placed in the AI race.
The firm argues that Microsoft’s real strength lies in how it brings AI into its existing products. With tools like Office, security, and data platforms already widely used, the company can add AI features directly into daily workflows.
This could drive higher usage and lift MSFT’s revenue per user over time.
Meanwhile, the rise of newer cloud players like CoreWeave (CRWV) and Nebius (NBIS) has also caught investor attention. While these firms are benefiting from strong demand for AI compute, BofA noted that their long-term role is still unclear. If larger cloud providers build enough capacity in-house, their position as overflow providers could come under pressure.
Is MSFT Stock a Buy, Hold, or Sell?
With 33 Buys and three Holds, Wall Street has a Strong Buy consensus rating on Microsoft stock. The average MSFT stock price target of $586.30 indicates 58.4% upside potential from current levels.
