‘Time to Pull the Trigger,’ Says Analyst as Microsoft Stock (MSFT) Eyes a Rebound

Have Microsoft (NASDAQ:MSFT) shares finally found a floor? After months of sliding, the stock has started to show signs of life, climbing about 6% from its March 27 low. Yet, the bigger picture hasn’t fully healed just yet, with MSFT still sitting 22% lower year-to-date.

As any experienced market watcher will know, often these declines represent a gift for investors, and right now, says Benchmark analyst Yi Fu Lee, MSFT stock offers a big one.

The selloff, which has been driven by investor worries over heavy capex spending on AI infrastructure and talent, presents an “attractive buying opportunity.”

“We believe it is very shortsighted for investors to walk away from Microsoft as the AI investments made today are part of the longer-term strategy to position the company as a relevant player in the AI super cycle adoption wave,” Lee said.

The analyst thinks concerns around heavy capex investment are misplaced, as Microsoft has already secured contracts covering most of the useful life of its GPU and CPU purchases. This significantly limits risk, with hardware demand effectively accounted for. Lee also believes Microsoft has “excellent visibility” into present customer demand, which is already outpacing supply before any strategic AI infrastructure expansion begins.

In fact, Lee takes a wholly bullish stance here, believing that Microsoft holds a key advantage through its access to large-scale proprietary enterprise and consumer data, effectively positioning it as a “true landlord” of data assets that “power the brain” behind AI/GenAI.

This is enabled by its productivity and enterprise ecosystem, including Microsoft 365, Microsoft Teams, Microsoft Fabric, Microsoft Dynamics 365, and LinkedIn, which together generate a substantial data foundation that can serve as fuel for AI and GenAI advancement.

Lee also highlights Microsoft’s investment in OpenAI (valued at approximately $227 billion), the company representing a strategically important “long-term cloud customer.” Leading frontier LLM providers, including OpenAI and Anthropic, have committed to long-duration usage of Microsoft Azure, reflecting a mutually reinforcing relationship that benefits both parties. These providers rely on a dependable hyperscaler like Microsoft to operate their large language models, while these cutting-edge models are also made available as part of the broader set of services offered to customers.

Also standing in Microsoft’s stead is a total addressable market (TAM) that “permeates every layer of the tech stack to capture AI diffusion tailwind.” Microsoft operates across all three major software categories, including infrastructure (such as Windows and GitHub), cybersecurity (through Microsoft Security), and vertical solutions (such as Dragon Medical One). Lee estimates the global TAM at ~$730.5 billion in 2025, expanding at a CAGR (compound annual growth rate) of 11.4% and exceeding $1.25 trillion by 2030.

Bottom line, Lee believes investors should use the significant pullback as an opportunity to accumulate Microsoft shares, treating the stock as a core long-term holding within SaaS and software portfolios.

“We advise investors not to try time/trade the market on this essential horizon infrastructure software name dominating both the enterprise and consumer markets,” the analyst summed up.

To this end, Lee assigns MSFT shares a Buy rating and $450 price target, implying the shares will post gains of ~19% a year from current levels. (To watch Lee’s track record, click here)

Elsewhere on the Street, the stock claims an additional 33 Buys and 3 Holds, for a Strong Buy consensus rating. The forecast calls for 12-month returns of 54%, considering the average price target stands at $582.17. (See MSFT stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.