Morgan Stanley has issued a new coverage of Microsoft (NASDAQ: MSFT) with an ‘Overweight’ rating and a $600 price target for the stock.
The new price target implies roughly 50% upside from the technology giant’s share price of about $400 at press time.
The new coverage reflects growing confidence that Microsoft’s artificial intelligence investments are entering a phase of stronger monetization through Azure cloud services and Copilot AI products.
The bullish call comes as Wall Street remains largely positive on Microsoft despite heightened scrutiny around AI spending and data center investments.
According to analyst Adam Wood, Azure and Copilot represent key inflection points that could drive durable earnings growth over the coming years.
Morgan Stanley believes the company’s current valuation does not fully reflect its potential to deliver earnings growth exceeding 20%.
Wood’s thesis centers on accelerating demand for Azure and expanding adoption of Microsoft 365 Copilot across enterprise customers.
The firm expects stronger-than-anticipated Azure growth and improving gross margins as Microsoft’s AI investments begin contributing more meaningfully to revenue and profitability.
To that end, the bank values Microsoft at 25 times its fiscal 2028 GAAP earnings per share estimate of $23.86, arguing that the stock remains inexpensive relative to its expected earnings trajectory.
The report also points to operating margin expansion and sustained enterprise AI adoption as catalysts for a potential re-rating of the shares.
Wall Street bullish on MSFT stock
Morgan Stanley’s $600 target is above the current Wall Street consensus. Data from 37 analysts covering Microsoft shows an average 12-month price target of $558.86, with the highest target at $680 and the lowest at $400.
The consensus rating on TipRanks is a Strong Buy, with 35 buy ratings, one hold rating, and one sell rating. Based on recent prices, the average target implies upside of more than 40%.
The new target also arrives ahead of Microsoft’s upcoming earnings reports, where investors will closely monitor Azure growth rates, Copilot adoption trends, and the financial impact of ongoing AI infrastructure spending.
While some analysts have recently trimmed price targets due to concerns over rising capital expenditures tied to AI expansion, most continue to maintain positive ratings.
Citi, for example, lowered its target to $570 while maintaining a bullish stance, citing Microsoft’s strategic position in enterprise AI.
