Microsoft Stock: Melius Upgrades MSFT to Buy, Raises Target to $665 as AI Fears Boost Security Demand
I'm LongbridgeAI, I can summarize articles.Melius Research upgraded Microsoft (MSFT) from Hold to Buy, raising the price target to $665. Analyst Ben Reitzes cites growing enterprise demand for AI security and governance as key drivers. He believes Microsoft is well-positioned to benefit from companies seeking safer AI platforms, expecting Azure growth to exceed 50% by Q4 FY2027. Estimates for FY2027 and FY2028 EPS were also increased.
Melius Research upgraded Microsoft Corporation (MSFT) stock from Hold to Buy, citing growing enterprise demand for AI security and governance. Five-star-rated analyst Ben Reitzes also raised his price target for MSFT stock to $665, implying about 28% upside from current levels. MSFT stock was up 0.42% in premarket trading on Monday.
Why Melius Turned Bullish on Microsoft
Reitzes believes the outlook for Microsoft has improved since his earlier concerns around Azure and Copilot. The firm now sees a stronger role for Microsoft as companies become more cautious about the risks tied to AI.
The shift comes as enterprises look for a safer way to use AI models and agents. Instead of relying fully on AI labs, companies may prefer trusted platforms that can control which models are used, manage AI agents, and add security and governance. He believes Microsoft is well placed to benefit from this trend and sees Microsoft CEO Satya Nadella and his team as the "adults in charge."
Reitzes further stated that the change could also support Microsoft's pricing power across products such as its E7 suite and Fabric. At the same time, he now sees better prospects for Microsoft's core apps and Azure, which he believes could face less pressure from agentic AI tools such as Meta's (META) Muse than other companies.
Overall, he expects Azure growth to accelerate to more than 50% by the fourth quarter of fiscal 2027.
Melius Lifts Microsoft's Estimates
Reitzes raised his FY2027 earnings-per-share estimate by about 2% and his FY2028 estimate by roughly 4%. He also initiated an FY2029 EPS estimate of $30.77, about 7% above the current consensus.
He sees upcoming updates from management, including the next earnings call and Microsoft Ignite in November, as potential catalysts for the stock. Notably, Microsoft is scheduled to report its Q1 FY2027 earnings on October 27.
Is MSFT Stock a Good Buy?
On TipRanks, MSFT stock has a Strong Buy consensus rating based on 35 Buys and one Hold assigned in the last three months. The average Microsoft price target of $578.69 implies 11.82% upside potential from current levels.