Microsoft (MSFT) (MSFT:CA)
Stifel Nicolaus upgraded Microsoft’s stock to a Buy from Hold on September 23 and raised its price target to US$575 from US$530. Analyst Brad Reback’s more positive view reflects expectations that Azure growth, wider Microsoft 365 Copilot adoption and improved efficiency in Microsoft’s data centres can support earnings as the company continues to invest heavily in AI.
Microsoft’s recent results give that case substance. Azure and other cloud services revenue grew 43% year over year in its fiscal fourth quarter. Azure revenue exceeded US$100 billion for fiscal 2026, while Microsoft 365 Copilot surpassed 30 million paid seats. Those figures show that cloud demand remains strong and that Copilot has moved beyond early trials into paid use at scale.
The question for investors is how profitably Microsoft can meet that demand. Capital expenditures reached US$41 billion in the fourth quarter, and the company said AI infrastructure investment and greater product usage weighed on gross margins. More computing capacity could allow Microsoft to serve customers it currently cannot fully accommodate. It also raises the amount of revenue Microsoft must generate to earn an attractive return on its spending.
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