Bank of America (BofA) reinstated its coverage of Microsoft (NASDAQ: MSFT) on Tuesday, March 24, giving it a “Buy” rating and a $500 price target, implying 31% upside potential.
According to analyst Tal Liani, the tech company’s strength lies in its Azure cloud infrastructure platform, which allows it to capitalize on artificial intelligence (AI) in both infrastructure and applications.
Azure, Liani argued, also lays the foundation for compute and data solutions in enterprise AI workloads. The conglomerate’s primary software products, on the other hand, drive consumption, being embedded into everyday tasks.
Melius Research cuts Microsoft share price target on Copilot concerns
In contrast to BofA, Melius Research expressed caution regarding Microsoft’s AI business just one day earlier, on Monday, March 23.
As noted by analyst Ben Reitzes, MSFT shares are down more than 20% year-to-date, which makes it the weakest performer among the so-called “Magnificent Seven.” The underlying issue, Reitzes believes, is Copilot, Microsoft’s “AI Companion.”
While slow addition has been a problem, the analyst focused more on how the company reacted to it, noting that when a company quietly reshuffles leadership around its most important growth initiative, that tends to signal deeper concerns.
He also mentioned that Copilot is now a “punch line” in some professional circles, with users sharing frustrating or humorous experiences with the tool. In his view, that suggests challenges that go beyond mere marketing.
“They reworked the division for Copilot, and now they have the guy that was running it working for models. That’s a red flag. You rarely reorganize anything into strength… One person after another was talking about funny experiences with Copilot. We all know it’s a bit of a punch line…I don’t think Satya’s happy with it,” Reitzes told CNBC.
Accordingly, Reitzes lowered his MSFT stock price target from $430 to $400, assigning it a “Hold” rating.
New Microsoft price target
BofA’s analysis is more in line with the Wall Street consensus than that of Melius. Namely, Microsoft shares currently enjoy an average price target of $586.41 for the next twelve months, which would imply a 53.11% upside, according to TipRanks.
What’s more, Melius is only one of three analyst firms that believe Microsoft is a “Hold,” a rating drastically outweighed by thirty-three “Buys.”
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