Microsoft (MSFT) PT Raised to $515 at Evercore ISI, 'remain bullish'

Evercore ISI analyst Kirk Materne raised the price target on Microsoft (NASDAQ: MSFT) to $515.00 (from $500.00) while maintaining a Outperform rating.

The analyst comments "Remain bullish coming away from Microsoft 360’ meetings. Over the past couple of days, we hosted our annual Microsoft 360’ event, which included a series of virtual panels with MSFT customers & partners as well as in person meetings with Microsoft’s President of the Americas, Deb Cupp, and the IR team. Some of the key takeaways from our discussions include: 1) We remain in the very early days of enterprise AI adoption and Microsoft is well positioned to capitalize on this opportunity at both the app/agentic layer as well as at the infrastructure layer with Azure; 2) Microsoft is ‘all in’ on AI and will continue to invest against the AI demand signal, which remains strong. AI investment will continue to be balanced against operational efficiency efforts; 3) As it relates to Microsoft’s commercial business, the macro backdrop is not having a meaningful impact on customers’ intention to buy as AI remains a key priority at the highest levels of an organization; 4) Partners see Microsoft differentiating in AI vs. other hyper-scalers and Microsoft’s broad product portfolio is allowing it to tap into new areas of spend outside of the IT budget (i.e. sales, supply chain, etc.); 5) According to partners, the ‘hero SKUs’ for Copilot include GitHub Copilot and Copilot for Teams. The fact that Microsoft is not charging for Copilot Chat is also creating faster adoption of agents that can plug into existing workflows; 6) Identity is an under-appreciated part of the agentic story and MSFT’s security capabilities are a compelling differentiator; and 7) Our customer panelists see MSFT as a share gainer in terms of their IT spend and a key part of their long-term AI strategy. Bottom line: We believe the upbeat tone of our partner and customer conversations supports our bullish long-term view related to MSFT’s ability to benefit from the adoption of AI in the enterprise market. Further, the positive commentary from MSFT related to Azure demand (both AI and non-AI) allows us to tweak our FY26 Azure estimates slightly higher (largely due to a slower rate of deceleration in non-AI consumption). While the recent move higher in the shares clearly accounts for a greater level of comfort around Azure demand trends, Microsoft’s AI opportunity remains in the early innings (potentially a $110bn business by CY28 – deep dive here) and we believe Microsoft remains an ‘all weather’ stock given its durable double-digit growth profile and fortress-like balance sheet. Reiterate Outperform and bump price target to $515 or 32.5x CY26 EPS."

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