StoneX has significantly raised Microsoft (Microsoft)'s target price from $450 to $600, an increase of 33.3%, and maintains a "buy" rating. The firm believes that Microsoft is shifting from large-scale construction of AI infrastructure to improving commercial efficiency through its own-developed chips, artificial intelligence models, and agent products. Microsoft will release its financial results for the first quarter of fiscal year 2027 after the U.S. stock market closes on October 28th, and the performance of its Azure cloud business will be key in determining the stock price trend after the report.

Shifting from expanding the computing power of AI to improving output per unit of input

StoneX pointed out that since the last quarter, Microsoft has made progress in multiple aspects of its artificial intelligence technology system, including advancing its self-developed Maia AI chips, developing its own AI models, and redesigning Copilot to enable it to perform continuous agent tasks.

At the same time, Microsoft is extending the hybrid AI capabilities of Azure to Windows computers and other terminal devices, and is reorganizing its internal business structures around AI intelligent entities, infrastructure, and consumer devices.

StoneX believes that the fiscal year 2026 has proven Microsoft's capability to build AI infrastructure on a large scale, and the focus for the fiscal year 2027 will be on increasing the AI service value, revenue, and profits generated per unit of capital and power input.

Azure Financial performance will determine the short-term stock price reaction

Microsoft's revenue in the past 12 months reached $331.84 billion, a year-on-year increase of 18%.

StoneX believes that the current market's growth expectations for Azure are at a relatively reasonable level. Therefore, in the financial reports to be released soon, whether Azure can meet these expectations will be an important indicator to watch.

Other institutions have also recently raised their target prices for Microsoft. UBS has increased its target price from $525 to $675, while TD Cowen has raised its target price from $540 to $625, both maintaining a “buy” rating. The main reasons are the optimism regarding the growth of Azure and the commercialization prospects of AI business.