Evercore ISI lifted its Microsoft price target to $525 from $510 while keeping an Outperform rating, pointing to aggressive AI spending and a catalyst path in the second half of 2026. The firm expects Azure acceleration and Copilot monetization to help the stock break out of its trading range.
Evercore ISI raised its price target on Microsoft to $525 from $510 on Tuesday and kept its Outperform rating. The firm believes sentiment toward the stock is overly apathetic at current levels.
The call leans on Microsoft's AI commitments. Evercore ISI expects the company to stay aggressive with AI investments and estimates fiscal year 2027 cash capital expenditures at roughly $210 billion, above the Street's estimate of around $180 billion. The firm does not see the fourth quarter as a major inflection point for the debate over that spending.
Why the stock has stalled
Microsoft shares have stayed range-bound as different investor groups wait for clarity on Azure revenue acceleration and Copilot monetization. Evercore ISI expects both revenue growth and operating income to grow in the double digits in fiscal year 2027.
The company has already shown momentum, with 17.9% revenue growth over the last twelve months and a PEG ratio of 0.77. InvestingPro analysis flags the stock as undervalued, with shares trading at $385 against a Fair Value of $479.
The catalyst path ahead
Evercore ISI laid out an attractive catalyst path for the second half of calendar year 2026, including Azure acceleration, Copilot momentum, and capital expenditure growth likely to peak in coming quarters. The firm said that acceleration, plus capital expenditure growth starting to normalize in 2027, could help shares build momentum.
Other analysts have moved on the name too. Wells Fargo trimmed its price target to $625 from $650 while keeping an Overweight rating and expects Azure growth near 41% year-over-year in constant currency for the first fiscal quarter. JMP Securities upgraded the stock, citing the company's AI transformation strategy after Microsoft moved to eliminate roughly 4,800 roles in a reorganization centered on AI.
Source: Investing.com
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