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Stifel raised Microsoft to Buy and lifted its price target to $575, citing sustained Azure growth, improved AI efficiency, strong Copilot adoption and reduced large-language-model research costs. Citi also favors U.S. equities and would increase stock exposure during market declines despite risks from higher oil prices and interest rates.
Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence for this week. Stifel this week upgraded Microsoft stock to Buy from Hold and raised its price target to $575 from $530, voicing increasing confidence that the company can sustain mid-to-upper-teens revenue growth.
Analysts led by Brad Reback said Microsoft"clearly turned the corner post the June quarter print," pointing to sustained Azure upside, reduced large-language-model research intensity and accelerating contribution from OpenAI. Stifel expects 200 to 300 basis points of further Azure upside as Microsoft achieves"a more sustained efficiency cadence across the stack from silicon, models and software," aided by CFO Amy Hood's disclosure that Microsoft has cut"dock-to-live times" by more than 50% over the past year, helping capacity convert to revenue faster.
Copilot seat count reached roughly 30 million in the fourth quarter, up 10 million quarter-over-quarter, while GitHub's shift to consumption-based pricing adds another growth lever. These tailwinds should offset moderating seat growth as Microsoft 365 approaches 500 million seats, sustaining at least mid-teens growth for several years, the analysts said.
Earlier concerns about margin compression proved"too negative," the analysts said, pointing to Azure efficiency gains, the elimination of revenue-share payments to OpenAI after an April contract revision, and an extension of asset useful life to 25 years from 15. Microsoft's need to aggressively invest in its own large-language-model development is also"abating" as open-weight models deliver comparable outcomes at lower cost.
Citi remains overweight equities led by the U.S., saying it would add more stock market exposure if shares pull back, even as higher oil prices, rising rates and poor seasonals weigh on sentiment.
"We are impressed how well the equity market has been trading in the light of higher oil, higher rates, and poor seasonals in Sep, even at a time when volatility in U.S. rates is rising," the bank's strategists wrote in their September house views. They noted stocks usually pull back after the Fed's first rate hike rather than before it, and that markets also tend to weaken ahead of midterm elections before the usual year-end rally.
"We prefer the U.S. as we still believe that the AI trade will continue," the strategists wrote, adding that the U.S. is also better protected from further rises in oil prices. Emerging Asia, cut in early July, is Citi's next choice when it adds risk. In bonds, Citi remains neutral on duration, long emerging markets and short European government bonds. The upcoming French election adds to European risks, and the bank moved U.K. gilts back to neutral.
"At this stage, it is unclear to us what it will take to stop a hawkish Fed," the strategists said. Citi stayed underweight investment-grade credit in the U.S. and Europe as a hedge for its equity overweight. In commodities, it remains long base metals and neutral on energy, having recently cut its gold long, and moved emerging market currencies back to neutral given rising U.S. rate volatility.
Wall Street analysts were broadly positive on Meta following its Connect event, where the company made its Muse AI agent the centerpiece of its product and hardware plans. Evercore ISI kept its Outperform rating and $860 price target, calling Meta its top long idea.
"Muse over Metaverse is a good thing for META investors," the analysts wrote, adding that Muse could lead investors to value the stock at 25 to 30 times 2028 earnings, taking shares to $1,000 or more. The broker compared the moment to Alphabet's own AI transition:"Just like GOOGL in 2025, what we are witnessing is a transition from a perceived 'AI Loser' to an 'AI Winner.
'" Raymond James analyst Josh Beck raised his price target to $860, based on 20 times 2028 earnings, citing Muse downloads of more than 300,000 a day and a base case of more than $50 billion in revenue against annual costs of about $12 billion. Separately, Mizuho's Lloyd Walmsley, who has an Outperform rating and $750 target, said Muse Charm — a keychain-like device expected before the holidays — could accelerate user growth further.
"Meta's AI product has significant momentum," he wrote, though he was more cautious on Meta's new $1,299 VR glasses due to their high price. Citi also kept its Buy rating and $800 target, saying it is more positive on the shares after the event, while JPMorgan said Muse could become the most widely used consumer AI app since ChatGPT.
In a separate note, Citi has raised its price target on Micron to $1,300 from $1,150, expecting the stock to rally into the SEMICON West conference and anticipating upside to results and guidance when the company reports. The bank lifted its August and November-quarter estimates on better-than-expected blended DRAM pricing, now modeling fiscal fourth-quarter sales and EPS of $51 billion and $31.45, above consensus.
Micron's stock"has made a large round trip since last earnings, falling 35% from the prior high and rebounding 34% from the July low," Citi analysts said, pointing to SEMICON West as the next catalyst. At the conference, Citi anticipates equipment makers will flag shortages of DRAM, MLCC, printed circuit boards and optical components, a potential bottleneck in the tools used to manufacture memory chips.
Those constraints could limit DRAM and NAND supply growth to the low-20% range and help push memory prices higher into next year, with both markets expected to remain undersupplied on strong AI-driven demand and prices likely peaking in Q2 2027. Citi assumes blended DRAM average selling prices rise 20% and 13% quarter-on-quarter in the current and following periods, with NAND up 34% and 15%, and expects enterprise SSD demand driven by AI inference to offset softer consumer NAND.
Also this week, Rosenblatt initiated coverage of SanDisk with a Buy rating and a $2,400 price target, arguing that AI is transforming NAND flash memory from a commodity into a critical piece of computing infrastructure. Analyst Kevin Cassidy said new AI compute platforms are creating an opportunity to reposition NAND"from a commodity storage medium to a more system-critical component of AI infrastructure," as expanding model sizes and data-intensive inference prioritize density, performance, endurance and supply certainty over the lowest price.
Cassidy pointed to SanDisk's BiCS8 and BiCS10 platforms, developed with manufacturing partner Kioxia over some 25 years, as supporting that shift — improving density with fewer 3D layers than some rivals, sustaining a cost and performance advantage in AI-oriented enterprise storage. New business model agreements with eight of the largest NAND customers, potentially covering about 65% of fiscal 2028 production, should improve demand visibility and reduce historical sector volatility, he added.
Management's fiscal 2028-to-2030 framework calls for mid-to-high-teens revenue growth, roughly 80% non-GAAP gross margin and a 50% adjusted free-cash-flow margin. Cassidy conservatively estimated fiscal 2030 non-GAAP earnings of about $300 a share. His $2,400 target is based on 10 times his fiscal 2028 earnings estimate, a multiple he called conservative given the growth outlook, while reflecting execution risk and the chance NAND reverts to cyclical, commodity-like pricing.
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