Not long ago, Microsoft looked like one of Big Tech’s laggards. Its shares were down more than 20% for the year heading into its late July earnings report.
Then Azure grew 43%, and the stock surged 9% the next day.
Analysts are now scrambling to catch up. Ahead of the company’s next report, a string of Wall Street firms, including TD Cowen, Mizuho and Citi, raised their price targets, and UBS made the biggest jump of the group.
Also read: Morgan Stanley finds a new twist in Microsoft’s AI story
UBS raises Microsoft stock target from $525 to $675
UBS raised its Microsoft price target to $675 from $525 and kept a Buy rating. Analyst Karl Kierstead noted that the shares have rallied 39% since the June quarter report and returned 30% over the past six months, leaving the stock near its 52-week high.
UBS made the call ahead of the company’s fiscal first-quarter report, due Oct. 28, according to Investing.com.
UBS admits the trade is getting crowded. It called Microsoft a “consensus long position,” with investors now expecting more from Azure and Microsoft 365. Still, the firm said “the fundamentals support those higher expectations” and argued the stock’s valuation at 23 times calendar 2027 earnings “is not stretched.”
Azure is doing the heavy lifting. The cloud business grew 43% in the June quarter and crossed $100 billion in annualized revenue, and management guided for about 45% growth in the September quarter. Revenue in the broader Intelligent Cloud segment rose 32% to $39.3 billion, as reported by TheStreet.
Demand is still running ahead of supply. Microsoft said “customer demand for Azure remained higher than available capacity,” while its commercial backlog jumped 84% to $678 billion.
Excluding OpenAI, that backlog still grew 25%, and Microsoft 365 Copilot now has well over 30 million paid seats.
UBS is not alone in bullish Microsoft view
Other firms are lining up behind the same story.
TD Cowen raised its target to $625 from $540 and sees the potential for a “higher than normal” Azure beat, pointing to third-party data that screened as the strongest in history, a full quarter of its Fairwater data center, and a bullish read on OpenAI’s growth.
The upgrades kept coming from there. Mizuho lifted its target to $600 from $510 after channel checks it called “very healthy overall,” while Citi raised its target to $636 from $600, citing survey and reseller checks that point to faster growth in productivity software and public cloud. Citi also ranks Microsoft among the best-positioned AI vendors.
