Microsoft Stock Rises. Every Analyst Now Says to Buy.

Microsoft reports quarterly earnings after the stock market closes on Wednesday. (Jeenah Moon/Getty Images)

Key Points

• Guggenheim Securities upgrades Microsoft shares to Buy with a $586 price target. Now, all 61 firms polled by FactSet rate it a Buy or equivalent.
• Strong Azure revenue should foreshadow further revenue beats in fiscal 2026.
• Microsoft’s M365 suite, with a near-monopoly, can monetize AI offerings like Copilot, potentially boosting revenue by 30% with high profit margins, according to analysts.

Wall Street’s final holdout on Microsoft stock finally joined its peers by upgrading shares to Buy, calling the technology company a clear artificial-intelligence beneficiary.

Guggenheim Securities upgraded Microsoft shares to Buy from Neutral and issued a price target of $586 in a research note Monday. The move means all 61 firms polled by FactSet now rate the stock a Buy or equivalent. It is the only name in the with a unanimous Buy rating, according to Dow Jones Market Data.

Microsoft stock was up 1.6% to $531.75 on Monday, while the Dow Jones Industrial Average advanced 0.5%, the S&P 500 rose 1%, and the Nasdaq Composite gained 1.7%. Microsoft stock has climbed 24% this year as of Friday’s close as the company heads into its quarterly earnings report after the market closes on Wednesday.

Microsoft is set to profit from AI in two ways, Guggenheim said—one obvious and the other more inconspicuous.

Let’s start with the obvious: Azure. Microsoft’s public-cloud arm business reported 39% revenue growth from the year prior for its fiscal fourth quarter, above the 35% growth analysts anticipated. Azure consumption largely is recurring, Guggenheim argued, which means the strong Azure numbers should foreshadow further revenue beats in fiscal 2026.

Analysts at Cantor Fitzgerald confirmed in their industry checks that AI is driving the strong Azure demand amid a supply-demand imbalance for AI infrastructure and computing power. The firm reiterated an Overweight rating and a $639 price target for Microsoft stock in a separate research note over the weekend.

Microsoft can benefit from AI in a less obvious way, too, Guggenheim argued. The company’s productivity suite M365, which includes software like Word and Excel, has a near-monopoly in the space, the firm said. That means Microsoft “has been, and will be able to continue to directly monetize AI offerings (namely Copilot) tied to that product suite,” analyst John DiFiccui wrote.

Copilot, an “AI assistant,” allowed Microsoft to boost subscription prices for its M365 Consumer suite. Guggenheim calculated that add-on as 30% more revenue for the business at a virtually 100% profit margin. Microsoft should be able to leverage its near-monopoly position to sell Copilot through its M365 Commercial suite, too, the firm argued.

Wall Street already has priced in Microsoft’s core strengths, of course, so buyers aren’t getting shares at a discount these days. But they are getting a relatively safe tech stock in the middle of an AI arms race, Guggenheim said.

“We believe the company is set up well to outperform for the rest of this year,” DiFucci wrote.

Write to Nate Wolf at nate.wolf@barrons.com