TLDR
- Morgan Stanley raised Microsoft’s price target to $625 from $582, maintaining an Overweight rating
- The investment bank named Microsoft its “Top Pick” in large-cap software, replacing Atlassian
- Analyst cites Microsoft’s strong positioning in generative AI, cloud migration, and cybersecurity markets
- Current valuation appears undervalued at less than 26x GAAP 2027 EPS versus sector average of 32x
- Wall Street consensus remains Strong Buy with 33 Buy ratings and average price target of $626.88
Morgan Stanley analyst Keith Weiss raised his price target for Microsoft stock to $625 from $582 while maintaining an Overweight rating. The move comes as the investment bank named Microsoft its “Top Pick” in the large-cap software space.
Weiss replaced Atlassian with Microsoft in the top position, citing the company’s “clearest and highest probability positive risk/reward” profile. The analyst believes Microsoft has multiple growth drivers that position it well for continued expansion.
The revised price target suggests 23.3% upside potential from current trading levels. Microsoft shares have already gained more than 20% year-to-date, showing strong momentum in 2025.
The analyst pointed to Microsoft’s leadership position across several key technology sectors. The company dominates cybersecurity with more than $40 billion in revenues, making it the largest vendor in the space.
Microsoft’s cloud business continues to benefit from enterprise workload migration to public cloud platforms. This trend supports the company’s Azure division and broader cloud services portfolio.
Generative AI represents another major growth opportunity for Microsoft. Recent polls indicate the company is the biggest wallet share gainer in this emerging market segment.
Valuation Appears Attractive
Weiss argues that Microsoft’s current valuation looks compelling compared to peers. The stock trades at less than 26x GAAP 2027 earnings per share, below the large-cap software sector average of 32x non-GAAP EPS.
The analyst believes the market underappreciates Microsoft’s ability to deliver consistent high-teens total returns. This durability factor makes the stock attractive for long-term investors.
Morgan Stanley expects Microsoft to benefit from sustained revenue momentum and better recognition of its diverse growth drivers. The firm also anticipates resolution of uncertainty around the company’s OpenAI relationship.
OpenAI Partnership Concerns Addressed
Some investors have expressed concerns about Microsoft’s relationship with OpenAI following the latter’s deal with Oracle. Weiss views this development as potentially positive for Microsoft.
The analyst suggests the Oracle contract may indicate Microsoft’s capacity constraints rather than competitive weakness. It could also reflect Microsoft’s preference for serving higher-margin enterprise customers.
Azure’s growth acceleration doesn’t depend solely on OpenAI, according to Weiss. The platform benefits from broader products and a diverse customer base across multiple industries.
Keith Weiss ranks No. 295 among more than 10,000 analysts tracked by TipRanks. He maintains a 64% success rate with an average return per rating of 13.1% over one year.
Wall Street consensus remains strongly bullish on Microsoft stock. The company has 33 Buy recommendations and just one Hold rating from analysts.
The average price target across Wall Street stands at $626.88, indicating 23.6% upside potential. This aligns closely with Morgan Stanley’s new target of $625.
Microsoft currently trades at $507.03 with a market capitalization of $3.77 trillion. The company recently announced price increases for Xbox consoles and expanded AI capabilities through Anthropic integration.
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