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Here's what changed their mind Published Wed, Sep 23 2026 3:53 PM EDT Natasha Abellard One of the few Microsoft bears on Wall Street has changed their tune, betting the tech giant's summer rebound has more runway ahead. Stifel upgraded Microsoft to buy from hold and raised its price target to $575 from $530, representing more than 15% upside from Tuesday's close. The analysts have grown more confident in Microsoft's growth trajectory, especially at its all-important Azure cloud unit, and less worried about pressure on the company's margins. With Stifel joining the bulls, there are only two remaining Wall Street firms with holds on Microsoft and no sell recommendations, according to FactSet data; there are 57 buy or buy-equivalent ratings. Shares of Microsoft are up fractionally Wednesday, bucking the broader market declines and weakness in cloud-computing peers Amazon , Google and Oracle . Microsoft "clearly turned the corner post the June quarter print," Stifel analysts wrote to clients in a note dated Tuesday. That's also the quarter that positively shifted Jim Cramer's view of the stock following months of disappointment in the enterprise software giant. MSFT 1Y mountain Microsoft's one-year stock performance. Shares came into that earnings release on July 28 down roughly 19% year to date. The stock was held back by a cocktail of concerns: that AI would upend the software industry, giving rise to the "SaaSpocalypse" narrative; that its much-maligned Copilot was falling behind rival AI tools; and that astronomical spending on AI data centers lacked a clear payoff. Then Microsoft delivered impressive results for both Azure and Copilot, and showed relative discipline on AI infrastructure spending, leaving its capital expenditure outlook for calendar year 2026 unchanged. Microsoft shares surged 15.5% in following the session and kept climbing from there, before topping out on Aug. 28 at $513.53. The stock has drifted about 2.5% lower over the past few weeks. Still, as of Wednesday, Microsoft remains up over 3% this year, a remarkable return to the green. Shares are about 8% below last October's all-time closing high. "We are increasingly comfortable with the company's ability to sustain mid/upper teens revenue growth," Stifel wrote, pointing to compelling drivers across both its cloud and enterprise software businesses. Microsoft's profitability is also stabilizing, analysts said, and its cash flow performance suggests less need for raising debt or equity than some hyperscaler peers. After what Stifel called a few "lackluster quarters," Azure is going in the right direction again and more data center capacity is coming online to meet demand. Azure's revenue growth rate accelerated to 43% on a constant-currency basis in its most recent quarter — compared with 39% and 38% in the March and December periods. The June quarter easily surpassed the FactSet consensus of of 40.4%. "Looking forward, we expect Azure upside to more closely mirror June results (200-300 bps of upside)," analysts wrote. "Microsoft appears to be hitting a more sustained efficiency cadence across the stack from silicon, models and software within Azure operations, likely freeing up additional capacity that can be effectively monetized in real-time by 3rd party apps/customers." Microsoft is also benefiting from the uptick in OpenAI's business, Stifel noted. Microsoft, which has invested billions in OpenAI over the years, receives a 20% revenue share from OpenAI, and Azure is the ChatGPT creator's primary cloud provider. Stifel is also upbeat on Copilot's future. Paid seats topped 30 million in Microsoft's June quarter, up 10 million from the prior quarter. Stifel expects Copilot and other AI tools to help sustain healthy average revenue per user gains for the Microsoft 365 software subscription business in years to come. One of the reasons Stifel had previously been more downbeat on Microsoft was expected pressure on profitability, but analysts conceded that "our expectations were too negative." Microsoft eliminating its own revenue shares to OpenAI helps change the calculus, as do efficiency gains at Azure. Though Stifel is the lone firm to upgrade Microsoft this week, it is the fourth to raise its price target, reflecting the stock's improved standing from just a few months earlier. Oppenheimer went to $570 from $510 on Tuesday. A day earlier, Cantor Fitzgerald went to $608 from $522 . Like Stifel, Cantor and Oppenheimer analysts were both enthused with Azure's momentum and kept their buy-equivalent ratings on Microsoft. Also on Monday, Rothschild & Co. Redburn lifted its price target to $440 from $400, but the firm stayed in the skeptic camp, reiterating its rare hold rating. Analysts cited concerns over the underlying economics of the AI infrastructure buildout. Despite a growing debate this month on whether to slow the development of AI models, there's been little sign that investment into compute infrastructure is moderating. On Wednesday, Microsoft said it will invest over $10 billion across the Middle East by 2030 to expand its data center presence. Bottom line The Club's stance on Microsoft is clear. "We're just going to keep holding [the stock]," said portfolio director Jeff Marks on Wednesday's Morning Meeting . Jeff agreed with Stifel that the most recent quarter signaled a turning point for Azure and Copilot. "Plus, this is one of the few hyperscalers that is living within their means. And what I mean by that is that they're still free cash flow positive," said Jeff. He also noted that Microsoft raising its dividend last week is another encouraging sign for Microsoft's future cash flows. The Club raised its Microsoft price target to $550 from $500 on Sept. 3, signaling our confidence in the company's resurgence and the market's improved attitudes toward software. But we kept our hold-equivalent 2 rating, preferring to wait for a better chance to buy after the stock's rally since reporting in July. (Jim Cramer's Charitable Trust is long MSFT and CRM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. More In Analysis Bond yields spike and stocks drop — plus, why Boeing is bucking the trend Jeff Marks Meta is having a ChatGPT moment with Muse. What is it and what makes it so special Zev Fima History rhymes for Meta, and our plan for Micron ahead of earnings Kevin Stankiewicz Read More
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