New York, July 9: Analysts at Oppenheimer have upgraded Microsoft Corp. (MSFT), citing strong momentum in the company’s AI business and Azure cloud platform, and calling it their “top large-cap idea” for investors focused on artificial intelligence and cloud computing.
📈 AI and Azure Growth Support Upside Potentialr
According to Oppenheimer, the sustained growth of Microsoft Azure not only supports the stock’s premium valuation but also provides significant room for upside. They note that Microsoft is well-positioned to emerge as a long-term winner in AI, with strong fundamentals and accelerating cloud consumption.
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“Microsoft is one of the few vendors capable of delivering a Rule of 60 profile at scale,” said the analysts.
(The Rule of 60 refers to a combined revenue growth rate and EBITDA margin of 60 or higher.)
🚀 AI Business Still Undervalued
Analysts believe Microsoft’s AI-related revenues are not yet fully priced into the stock, and that its agentic AI era offerings—particularly through Copilot Studio—could become major drivers of durable growth.
⚠️ Copilot Value Still a Risk Factor
Despite the optimism, Oppenheimer flagged Microsoft’s Copilot AI assistant as a potential risk. Their research suggests the initial value proposition has underwhelmed enterprise users, leading to a hesitance in broad AI adoption.
“If customers perceive AI capabilities as premature, it could trigger constrained deployments and slower AI spending,” the report cautioned.
This could negatively affect Azure’s usage and financial performance and undermine Microsoft’s current image as an AI leader.
📉 Fiscal 2026 Outlook: A Cautious Note
Another potential risk is that Microsoft might issue conservative guidance for fiscal 2026, due to macroeconomic uncertainties. Still, Oppenheimer believes that investors are underestimating Microsoft’s potential to scale quickly in the coming AI wave.
🧠 Future Outlook: From Copilot to Custom AI Agents
Oppenheimer expects the upcoming growth of Copilot Studio, which allows users to build custom AI agents, to outperform current investor expectations, and sees this as key to reigniting growth.
✅ Final Verdict
“Microsoft is a formidable and strategically positioned AI supplier in software,” the report concludes.
The analysts recommend Microsoft as a core holding for long-term investors, particularly those betting on the rise of AI and cloud services.