Guggenheim believes there are many reasons to be bullish on Microsoft. The investment bank upgraded its rating on shares of the tech giant and the Magnificent Seven from neutral to buy. Analyst John DiFucci also has a price target of $586 per share. Microsoft stock has risen 24% this year. DiFucci’s new price target represents a 12% increase from Friday’s closing price of $523.61. MSFT YTD Mountain MSFT YTD Chart DiFucci cautioned that Microsoft’s valuation is not cheap at current levels and may never trade at levels that would be considered cheap. But he justified this by citing the company’s strong business, adding that “boredom is beautiful” when it comes to Windows. “It’s considered a relatively low-risk stock, but we think that’s rooted in the good management of two near-monopoly companies and visionary leaders who have brought about change,” DiFucci said. “The summary here is that the profitable Windows business is likely to be significantly undervalued going forward, which should help ease revenue pressure from the rise of the lower-margin Azure business.” The analyst noted that Azure, Microsoft’s cloud computing platform, is a clear beneficiary of artificial intelligence. He particularly praised the repeatability of its consumption model (which he believes works similarly to a subscription service) as a driver of future revenue growth. But DiFucci thinks it’s less obvious that the company’s bundle of productivity software, Microsoft 365, will benefit from AI. “Microsoft believes that by charging more for its exclusive position in Office, it becomes a unique application vendor that can directly monetize AI,” DiFucci wrote. “While we disagreed with the overly optimistic benefits predicted by many in the investment community shortly after Copilot’s launch, we always believed M365 represented a significant opportunity to further increase revenue and profits, adding to Microsoft’s dominance in the Productivity Suite market.” The analyst added that Microsoft’s “profit-rich businesses” such as Windows and Microsoft 365 should continue to help fend off headwinds in the current investment cycle. (Learn the best strategies for 2026 from inside the NYSE with Josh Brown and others on CNBC PRO Live. Tickets and information here.)
