Guggenheim analyst John Difucci upgraded Microsoft (MSFT) stock from a “Hold” rating to a “Buy” ahead of the tech giant’s first-quarter fiscal 2026 results. He also assigned a price target of $586, which implies nearly 12% upside potential from current levels. Difucci highlighted that Microsoft has been a major beneficiary of the AI revolution, not an AI casualty, with major AI hyperscalers poised to benefit from the rapidly growing technology. Following the upgrade, MSFT shares rose 1.1% in pre-market trading.
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Difucci is a five-star analyst on TipRanks, ranking #162 out of 10,084 analysts tracked. He has a 62% success rate and an impressive average return per rating of 19%.
Microsoft Is Set to Outperform for the Rest of 2025
Difucci believes that Microsoft is comfortably set to outperform expectations for the rest of 2025, backed by its “near monopoly” in the Productivity Suite and “second monopoly” in Windows operating system (OS) markets. He emphasized that Microsoft’s Azure cloud services business has several opportunities to monetize the AI momentum through AI-enabled solutions like Copilot.
Additionally, Difucci noted that the Windows OS is expected to surpass consensus expectations in the near to mid-term. He added that Windows still adds about 20% of Microsoft’s profits, although it only adds about 10% of total revenue.
However, Difucci cautioned that Microsoft’s stock valuation has remained high for nearly a decade and is likely to stay elevated for at least another year, reflecting investor confidence in its long-term growth potential. Despite this, he believes Microsoft’s strong fundamentals and AI leadership position it well for continued outperformance through 2025.
Is Microsoft Stock a Good Buy?
Microsoft is set to release its Q1FY26 results after the market closes on October 29. The Street expects Microsoft to report adjusted earnings per share of $3.67 on revenues of $75.37 billion.
Analysts remain highly optimistic about Microsoft’s long-term prospects. On TipRanks, MSFT stock has a Strong Buy consensus rating based on 32 unanimous Buy ratings. The average Microsoft price target of $630.28 implies 20.4% upside potential from current levels. Year-to-date, MSFT stock has gained nearly 25%.
