Evercore ISI Hikes Microsoft Price Target to $525

Evercore ISI analyst Kirk Materne raised the price target on Microsoft (NASDAQ: MSFT) to $525 (from $510) while maintaining an Outperform rating.

“At a macro level, Microsoft’s business remains on strong footing with revenue growth and operating income expected to grow in the double digits in FY27.

However, shares remain stuck in a trading range as momentum/growth investors want to see Azure revenue accelerate and Copilot monetization/usage inflect; while value investors are looking for an ‘all clear’ sign in terms of when cash flow could bottom and comfort that incremental GM headwinds will not negatively impact EPS expectations.

Given that we expect Microsoft to remain aggressive as it relates to its AI investments, we do not see F4Q being a major inflection point as it relates to the debate on capex spend (we believe the Street remains a bit low at ~$180bn in FY27 cash capex, EVR-ISI: ~$210bn).

That said, we believe seeing Azure accelerate in 2H and further Copilot monetization could help shares to start to build some momentum as capex growth could start to normalize in 2027.

Bottom line: We believe that the risk/reward continues to skew to the upside and if MSFT can provide some additional clarity on when FCF could infect, the upside optionality is material.

In our view, sentiment is overly apathetic at current levels, and we see an attractive catalyst path for MSFT in 2H CY26 with Azure acceleration on tap, Copilot momentum starting to build, and capex growth likely to peak in the coming quarters.”

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