Key insights
- TD Cowen reiterated a Buy rating on MSFT, raising revenue estimates for Office 365 Commercial Cloud due to strong Copilot adoption expectations. They project Copilot penetration to rise significantly, driving future growth. Guggenheim also reiterated a Buy rating. This positive analyst sentiment, driven by AI adoption, suggests a bullish outlook for Microsoft and potentially the broader tech sector.
Investing.com - TD Cowen reiterated a Buy rating and $540.00 price target on Microsoft stock (NASDAQ:MSFT), while raising revenue estimates for the company’s Office 365 Commercial Cloud business. The software giant, with a market capitalization of $3.12 trillion, currently trades at $418.35 and is considered undervalued according to InvestingPro analysis, which places it among companies on the most undervalued list.
The firm increased its Office 365 Commercial Cloud revenue compound annual growth rate estimate to approximately 15% for fiscal years 2026 through 2030, up from a prior estimate of approximately 13.5%. Microsoft’s overall revenue growth stands at 16.67% over the last twelve months, with a P/E ratio of 26.07 and a PEG ratio of 0.9.
TD Cowen released the updated estimates alongside a generative AI adoption report. The report indicates strong upgrade intentions among customers over the next 12 to 18 months.
The firm expects Microsoft’s Copilot adoption curve to steepen with the introduction of the new E7 bundle and Copilot Cowork release.
TD Cowen’s base case projects Copilot penetration to rise from approximately 4% in fiscal year 2026 to approximately 17% in fiscal year 2030.
In other recent news, Microsoft announced a one-time voluntary retirement program for eligible U.S. employees, a first in the company’s 51-year history. This program targets U.S. workers at the senior director level and below, whose combined years of employment and age total 70 or more. Meanwhile, Guggenheim has reiterated its Buy rating for Microsoft, maintaining a price target of $586.00 ahead of the company’s fiscal third-quarter 2026 earnings report. The firm believes Microsoft can meet the third-quarter revenue estimates but notes potential risks to the fourth-quarter guidance, particularly for Azure, while seeing upside potential in Windows OEM. Additionally, Microsoft explored acquiring AI coding startup Cursor before SpaceX’s recent $60 billion deal but decided not to proceed with a bid. These developments come amid broader concerns highlighted by the White House regarding industrial-scale AI intellectual property theft, primarily attributed to entities based in China. The White House has warned of an imminent crackdown on practices that exploit U.S. innovation.
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