Morgan Stanley has raised its price target for Microsoft (NASDAQ: MSFT) stock to $600, indicating a potential gain of approximately 50% from the current share price near $400. The firm assigned an 'Overweight' rating, reflecting increased confidence in Microsoft’s AI-driven growth prospects.
According to analyst Adam Wood, Microsoft's investments in artificial intelligence, particularly through Azure cloud services and Microsoft 365 Copilot, are entering a phase of stronger monetization. Wood highlighted that these products represent key inflection points likely to sustain earnings growth above 20% in the coming years.
The valuation is based on a multiple of 25 times the company's fiscal 2028 GAAP earnings per share estimate of $23.86. Morgan Stanley argues this pricing overlooks the full potential for profit expansion, driven by anticipated improvements in Azure growth and gross margins as AI initiatives contribute more significantly to revenue.
Wall Street Consensus and Market Context
The $600 price target surpasses the average Wall Street forecast of $558.86 from 37 analysts, whose estimates range between $400 and $680. TipRanks data shows a consensus rating of Strong Buy, with 35 buy recommendations, one hold, and one sell. This average target implies over 40% upside from current prices.
The updated forecast precedes Microsoft’s upcoming earnings reports, where investors will scrutinize Azure’s growth, adoption rates of Copilot, and the financial effects of AI infrastructure spending. Some firms like Citi have recently reduced their targets to $570 but maintain a bullish outlook, citing Microsoft’s strategic role in enterprise AI.
This material is for informational purposes and does not constitute financial advice.
