Investing.com --Shares of Microsoft were higher on Monday after Citizens JMP Securities initiated coverage with a Market Outperform rating.

The brokerage firm put a $550 price target, citing the company's strong positioning in enterprise AI and attractive valuation following a recent pullback.

Citizens said that the software giant is well positioned to capitalize on the emerging era of enterprise AI despite recent investor concerns over its reliance on third-party models and heavy infrastructure spending.

Citizens estimates Microsoft's total addressable market could expand from roughly $1.8 trillion in 2025 to $5.1 trillion by 2030, driven by growth in AI software, infrastructure, cybersecurity, and enterprise applications. The firm believes Microsoft's broad enterprise footprint, Azure cloud platform, security capabilities, and extensive partner ecosystem position it to capture a significant share of that opportunity.

The report forecasts revenue growth accelerating to 17% in fiscal 2026 from 15% in fiscal 2025, with operating margins expanding to 47%. Citizens projects fiscal 2026 revenue of $329.5 billion and non-GAAP earnings per share of $16.81, broadly in line with Wall Street expectations.

The brokerage also pointed to strong momentum in Azure, which it estimates is running at an annual revenue pace exceeding $100 billion and continuing to benefit from AI-related demand. Meanwhile, Microsoft's growing AI portfolio—including Copilot, Foundry, Fabric, and custom silicon initiatives such as Maia and Cobalt—should strengthen its competitive position across the AI stack.

However, Citizens cautioned that risks remain, including increased competition from AI-native companies, uncertainty around AI monetization and pricing models, rising capital expenditures tied to AI infrastructure, and Microsoft's continued exposure to OpenAI-related commitments.

At the current share price of about $450, Citizens argues Microsoft trades at a discount to large-cap technology peers on a 2027 earnings basis, leaving room for multiple expansion as investors gain confidence in the company's long-term AI strategy.