Microsoft's AI Strategy Boosts Cloud Growth and Efficiency
Bank of America has raised its price target for Microsoft (NASDAQ:MSFT) from $500 to $600, citing the company’s accelerating cloud growth and improved efficiency in artificial intelligence. The upgrade follows strong fourth-quarter fiscal 2026 results that reinforced confidence in Microsoft's AI strategy. Azure saw a significant increase in growth rate, rising from 39% in Q3 FY2026 to 43% in Q4 FY2026, with guidance for continued acceleration. Paid Microsoft 365 Copilot seats exceeded 30 million, and remaining performance obligations grew by 84% year-over-year. Microsoft is developing a diverse portfolio of AI models that allow customers to choose the most cost-effective solution while maintaining control over usage. The company's specialized MAI-Code-1-Flash model offers comparable performance at lower costs than GPT-5.6 for common tasks, and other models have significantly reduced GPU consumption in applications like PowerPoint and Dynamics 365.
Tickers: $MSFT
Topics: AI Azure performance cloud growth Microsoft Copilot price target upgrade