Wall Street analysts are cheering Microsoft’s (MSFT) shares following the U.S. tech giant’s revised restructuring deal with ChatGPT maker OpenAI (PC:OPAIQ), announced on Tuesday. Morgan Stanley (MS) noted that the arrangement removes the “number one” stumbling block facing MSFT stock — a sentiment also echoed by Evercore ISI (EVR).
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Microsoft-OpenAI Agree to Restructuring, $135 Billion Stake
On Tuesday, Microsoft and OpenAI announced an agreement that will enable OpenAI to become a public benefit corporation — a for-profit entity that will aim to serve both public benefits and shareholder interests. The arrangement removes a key constraint that has limited OpenAI’s ability to raise more capital under its capped-profit model.
Microsoft said it will take a 27% stake valued at $135 billion in the new corporation. Under the modified plan, OpenAI will also purchase Microsoft’s Azure cloud services in increments, totaling $250 billion.
Furthermore, the agreement grants Microsoft exclusive intellectual property (IP) and Azure application programming interface (API) rights to OpenAI through 2032, among other terms. The IP rights will last until an independent panel verifies an artificial general intelligence (AGI) developed by OpenAI.
Wall Street Goes Bullish on Microsoft
Following the development, Wall Street analysts have showered price target boosts and Buy ratings on Microsoft. This is even as they expect bigger earnings per share and revenue growth — particularly from the Intelligent Cloud segment that houses Azure.
The Washington-based tech giant is preparing to release its first quarter fiscal year 2026 results after the U.S. market closes on Wednesday. Options traders are also bracing for higher volatility after the results, compared to Microsoft’s historically modest post-earnings decline.
Analysts Defend Bullish Stance
Reacting to the OpenAI deal, Goldman Sachs analyst Kash Rangan, who reaffirmed his $630 price target for MSFT stock at a 16% upside, believes that the deal creates a crucial path towards establishing clear ownership of the technology between both companies. Rangan also argued that the extended API rights for Microsoft — which now also cover post-AGI models — will deliver critical long-term value protection.
On its part, Morgan Stanley noted the revenue share agreement and API exclusivity will help to ease short-term tactical concerns about Microsoft. The financial services firm also sees the $250 billion Azure contracts as helping Microsoft match up with OpenAI’s recent $300 billion cloud deal with Oracle (ORCL).
Chipping in, William Blair analyst Jason Ader highlighted that the agreement introduces potential challenges, including heightened competition in the public cloud market and a move away from traditional on-premises software setups. Still, Ader believes the advantages—like strengthening Microsoft’s Copilot initiative and unlocking more monetization opportunities through Azure and OpenAI—ultimately surpass these concerns.
Is Microsoft a Buy, Sell, or Hold?
Across Wall Street, Microsoft’s shares currently boast a Strong Buy consensus rating from analysts, according to TipRanks data. This is based on 33 Buy recommendations assigned by analysts over the past three months.
Moreover, the average MSFT price target of $631.12 suggests over 16% upside potential from the current level.
