UBS raised its price target for Microsoft to $675. The previous target was $525. The firm maintained its Buy rating ahead of Microsoft's earnings report on October 28.
UBS cited accelerating demand for AI services, which it expects to drive growth in Azure and Microsoft 365. Analyst Karl Keirstead said Microsoft's fundamentals support the higher valuation, despite a 39% rally in the stock.
UBS expects robust Azure revenue growth, driven by enterprise AI spending and contributions from OpenAI. The bank raised its valuation multiple for Microsoft, citing the company's position in AI monetization and profitability as reasons for a premium.
The move came amid broader positive analyst sentiment, with other firms also raising their price targets.