Microsoft gains as Stifel turns bullish after lagging 2026 performance

Microsoft shares gained 1.3% Wednesday after Stifel upgraded the stock to buy from hold, leaving few major Wall Street firms still cautious on the software giant.

Analyst Brad Reback raised his price target to $575 from $530, implying nearly 16% upside from Microsoft’s Tuesday close of $498. He cited greater confidence that Microsoft can sustain mid to upper teens revenue growth as advances in open weight AI models support its model agnostic strategy.

The upgrade leaves Microsoft with overwhelmingly positive analyst sentiment. Bloomberg data showed 68 analysts, or roughly 96% of those covering the stock, recommend buying it. Three maintain hold ratings and none recommend selling.

That optimism contrasts with Microsoft’s stock performance this year. Shares are up less than 5% in 2026, compared with a roughly 21% gain for the Nasdaq 100, making Microsoft one of the weakest performers among the Magnificent Seven.

Concerns around the company’s heavy AI infrastructure spending and the potential impact of generative AI on legacy software businesses have weighed on shares despite continued revenue growth.

Those concerns eased after Microsoft’s July earnings. Revenue rose 18% to $90 billion, while Microsoft Cloud revenue increased 27% to $59.3 billion. Azure and other cloud services revenue jumped 43%.

The results triggered Microsoft’s largest one day market value gain on record, as investors responded to evidence that its AI and cloud spending was translating into stronger growth.

Stifel said the earnings report showed Microsoft had “clearly turned the corner,” with operating efficiencies, strong cash generation and continued cloud growth supporting the firm’s more bullish outlook.