Bank of America has raised its price target on Microsoft (MSFT) to $600 from $500 and maintained a Buy rating, as the firm pointed to accelerating Azure growth, stronger Copilot adoption, and improving visibility into Microsoft’s artificial intelligence investments.

The new target is about 19% above Microsoft’s Tuesday trading level of $502.43, when the stock was down 1% on the day. Microsoft has risen only 4.2% year to date and is down 0.5% over the past 12 months, trailing the S&P 500, which has gained nearly 12% over the same period.

Bank of America analyst Tal Liani said the latest results support a re-rating of the stock. His argument centers on Azure, Microsoft’s cloud platform, where growth accelerated to 43% in the fiscal fourth quarter ended June 30, up from 39% in the prior quarter. Microsoft has guided for 45% growth in the first quarter of fiscal 2027, which would mark another step up.

Copilot is also contributing to the case. Paid Microsoft 365 Copilot seats topped 30 million, and net additions more than doubled quarter over quarter. Remaining performance obligations rose 84% year over year, a sign that more contracted business is still working its way into future revenue.

BofA said its revised price target is based on 28 times its calendar year 2027 earnings estimate, up from 24 times previously. The firm said the higher valuation reflects faster cloud growth and better visibility into returns on Microsoft’s AI investment.

Liani said Microsoft is building a broad portfolio of AI models that allows customers to choose the most cost-effective option for each task.

“Not every workload requires a complex and expensive frontier model, and Microsoft’s approach helps optimize performance while reducing token consumption,” he wrote.

Morgan Stanley analyst Adam Wood also reiterated his own $600 price target at the end of July following fiscal fourth-quarter earnings, saying the company’s “growth thesis” is “taking shape.” Wood said Microsoft maintained its margins even as AI spending increased, a notable point as capital expenditures reached about $41 billion in the fourth quarter alone and $145 billion for the full fiscal year.

The broader analyst community remains constructive on Microsoft. Among 60 Wall Street firms tracked by FactSet, the average rating on MSFT is Buy, with a consensus price target of $565.88. Bank of America’s new $600 target is now near the top of that range.

According to InvestingPro, 17 analysts have raised their earnings estimates for the coming period. The stock currently trades at a price-to-earnings ratio of 28.5 and a PEG ratio of 0.89, which InvestingPro flags as undervalued relative to growth.

Meta Platforms has become a major Azure customer, spending hundreds of millions of dollars annually on the platform. Moody’s recently affirmed Microsoft’s Aaa credit rating with a stable outlook.