Microsoft gets rating upgrade at Oppenheimer on AI opportunity

Oppenheimer upgraded Microsoft’s (NASDAQ:MSFT) rating to Outperform from Perform and set a $600 price target, spotlighting the U.S. tech giant’s AI opportunity.

Shares of Microsoft rose about 1% premarket on Wednesday.

“In our view, investors’ attention on the ramp of Microsoft’s AI revenue stream will only increase as Azure’s growth remains strong, offering not only valuation support (akin to AWS [Amazon Web Services] underpinning Amazon’s valuation), but also upside potential as this revenue stream continues scaling fast and investors embrace Microsoft as one of the long-term AI winners in software,” said analysts led by Brian Schwartz.

The analysts added that sustaining robust growth in its AI business is not fully in the stock, nor is a reacceleration in Azure’s growth in fiscal 2026.

In addition, the analysts said that “Microsoft is one of only a few vendors in the software industry capable of delivering a Rule of 60 business profile and at unprecedented scale, which we think lends good support to premium multiples.”

Schwartz and his team noted that investors are underestimating the potential for Microsoft’s AI business to drive durable consumption growth for Azure and scale fast in the agentic AI era given how underwhelming the value proposition and use cases for Copilot proved.

However, the analysts added that the consensus view may be too conservative in assuming that Copilot Studio and related AI technologies will have a similar early life-cycle outcome as Copilot.