CLSA Reiterates Outperform on Microsoft, $535 PT

CLSA analyst Bhavtosh Vajpayee reiterated an Outperform (2) rating and $535 price target on Microsoft (NASDAQ: MSFT).

“43% YoY growth in Azure cloud revenue in 4QFY26 will gladden investors, but we are also pleased by the strong addition of paid seats in Copilot, which rose to 30m, from 20m in the prior quarter.

While acknowledging missteps in the Copilot rollout, we contend Microsoft holds one of the cleanest optionalities in AI – conversion of its 450m+ M365 seats to Copilot paying seats.

30m is just a start. At 20x FY27CL GAAP PE, the stock looks unusually cheap for a high-teens top-line Cagr.

We retain an Outperform rating with a target price of US$535, based on 25x Dec 27CL calendarised earnings.”

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