Bank of America Raises Microsoft Stock Price Target for 2026
Bank of America analyst Tal Liani has raised his price target for Microsoft (MSFT) to $600 from $500, citing strong performance in Azure and AI initiatives. The new target implies an 18.3% upside based on a September reference price of around $507.29. Microsoft’s fiscal 2026 results showed quarterly sales growth of 18%, with Azure growing by 43%. Additionally, the company expanded its Microsoft 365 Copilot to over 30 million paid seats and is preparing for a new AI chip launch in September. BofA now values Microsoft at 28 times forecasted 2027 earnings—up from 24 times previously—and above the typical software peer range. The bank sees reduced execution risk around Microsoft’s large-scale AI investments, particularly as Azure continues to outperform expectations with growth rates exceeding 39%. Remaining performance obligations also surged by 84% year-over-year to $678 billion, offering strong revenue visibility. Despite concerns over capital spending and free cash flow declines due to heavy infrastructure investment, BofA believes the long-term returns from these investments will justify a premium valuation. Microsoft’s AI strategy is seen as effective in monetizing demand across both its cloud infrastructure (Azure) and higher-margin applications like Copilot.
Topics: AI chips Azure growth Bank of America Microsoft Stock price target