Oppenheimer Upgrades Microsoft to Outperform, Sees 20% Upside

Oppenheimer, a prominent investment bank, has upgraded its rating for Microsoft (MSFT.US) to "outperform," highlighting the company's strong position in the field of artificial intelligence (AI) that remains undervalued by the market. The bank has set a target price of $600 for Microsoft, which represents a more than 20% upside from its latest closing price. This new target price is notably higher than the average analyst target price of slightly below $530, which implies a potential 6% increase.

Analyst Brian Schwartz, who made the upgrade, noted that despite Microsoft's strong stock performance this year and its proximity to historical highs, the current stock price of $496.62 does not fully reflect the company's potential in the AI sector. Schwartz emphasized that the continuous growth potential of Microsoft's AI business and the expected acceleration of its cloud service platform, Azure, in the 2026 fiscal year are not adequately reflected in the stock price.

Schwartz further explained that as Azure continues to grow, investor focus on Microsoft's AI revenue growth will intensify. This will not only support the company's valuation but also provide upward momentum for the stock price as this revenue stream expands rapidly. Additionally, as investors recognize Microsoft as a long-term winner in the software industry's AI landscape, the stock price is expected to benefit further.

Oppenheimer's upgrade aligns with the growing consensus on Wall Street regarding Microsoft's robust position in AI. The bank joins a large group of analysts who are bullish on Microsoft, with approximately 90% of tracked analysts recommending a buy, and none issuing a sell rating. This collective optimism underscores the market's confidence in Microsoft's future prospects, driven by its AI capabilities and the growth potential of its cloud services.