Stifel upgraded Microsoft to Buy from Hold and raised its price target to $575 from $530 in a Sept. 23 note, citing Azure and AI growth. It expects mid-to-upper-teens revenue growth with stable margins, though high AI and data-center costs could still pressure profitability.
Stifel says Azure's acceleration may continue as new data-center capacity comes online, supported by operational efficiencies and a growing revenue contribution from OpenAI. CFO Amy Hood said efficiency gains are being monetized quickly and process improvements have shortened the time needed to bring CPU and GPU capacity online. Copilot reached roughly 30 million seats in Microsoft's fiscal fourth quarter; GitHub's move toward consumption-based pricing is another potential source of recurring growth.
Microsoft shares had gained roughly 5% year to date, compared with about 21% for the Nasdaq 100. Hedge funds holding the stock fell from 282 in the first quarter to 273 in the second, although Arrowstreet Capital raised its stake 14% to about $10.31 billion and Fisher Asset Management increased its position 3% to roughly $9.92 billion.
