'Best bet on AI': Piper Sandler urged clients to buy back Microsoft after collapse

American investment bank Piper Sandler, one of the veterans of the US financial market, named Microsoft shares as its favorites in the software sector. And this despite the collapse of quotations by almost 10% due to investors' concerns about the slowdown in the growth of cloud services. At the same time, the company's quarterly results exceeded expectations. Piper Sandler considers the market reaction excessive, and Matrix Asset Advisors states that the shares of this beneficiary of the AI boom have not looked so cheap for a long time.

"We view Microsoft as perhaps the best net bet on AI adoption to date," CNBC quoted Piper Sandler analyst Billy Fitzsimmons as saying in a note published Feb. 2. Citing a survey of CIOs that showed growing optimism about Azure cloud service and artificial intelligence Copilot, Fitzsimmons recommended clients buy the company's securities on the drawdown that followed the release of its quarterly earnings. Demand for AI "will continue to outpace supply" in 2026 and 2027, which will drive adoption of both Azure and Copilot, the analyst explained.

According to Fitzsimmons, Microsoft is in the best position to capitalize on increased spending on AI infrastructure. The company is financially better prepared for the necessary capex than its competitors: it has a strong balance sheet and free cash flow is expected to remain "solidly positive" in the coming years, the expert said.

Now is a "great time" to build up a position on Microsoft, David Katz, chief investment officer at Matrix Asset Advisors, told CNBC. "Microsoft is the clear leader in AI. They had a very good quarter, but the stock fell sharply. They're now trading at a price-to-earnings [P/E] projected earnings ratio [P/E] below 23, which is the lowest valuation in the last eight years," he argued, adding that a similar strategy of buying quality assets on the downturn has previously worked for Google and Meta Platforms securities.

Microsoft's quarterly report on January 29 led to a massive revision of expectations: a number of investment strategists, including analysts at Piper Sandler, lowered their target price on the company's stock. The range ranged from a token 0.6% at Bernstein to 15.2% at Wolfe Research. According to MarketScreener, only two analysts (New Street Research and Stifel) went against the trend, raising their forecasts slightly. But despite this price downdraft, all experts kept their recommendations on Microsoft securities at "buy" (Buy) or "above market" (Outperform, Overweight) levels.

Microsoft shares have fallen nearly 15% since the beginning of 2026. According to MarketWatch, only three analysts recommend holding the company's securities (Hold rating), while the rest advise buying.

This article was AI-translated and verified by a human editor