"Responsible Adults": Melius Analysts Cite Reasons to Buy Microsoft Stock

Melius, a research and investment firm, has upgraded its recommendation on Microsoft stock and now recommends buying it. Analysts believe investors should take advantage of any price dips. Their optimism stems from growing corporate demand for security solutions driven by concerns about artificial intelligence: in this climate, Microsoft will be seen as a reliable and capable “grown-up” provider, according to Melius.

Melius upgraded its recommendation on Microsoft shares from "Hold" to "Buy" and set a price target of $665, Barron's reported. The new target is 29% higher than the stock's most recent closing price.

Microsoft’s importance is growing amid the debate over the threat posed by artificial intelligence, as warned by Dario Amodei, CEO of Anthropic, the world’s most valuable AI startup. This is sparking interest among corporate resellers in Microsoft’s security products, according to Melius analyst Ben Raitzes in a Barron’s article. This “panic” only confirms that Microsoft and cybersecurity companies are needed now more than ever, the expert says.

“[Microsoft CEO] Satya Nadella and his team will increasingly be seen as ‘responsible adults’—a key element in ensuring security, governance, and AI CYA strategy (protection against AI risks, short for ‘Cover Your Ass.’ — Oninvest), which, by all accounts, is still in its very early stages,” CNBC quotes Melius analysts as saying.

The growing demand for AI could give Microsoft the opportunity to charge premium rates for its tools while simultaneously expanding its capacity to serve a larger number of cloud customers, thereby driving growth through both higher prices and increased volume, writes Wrightces.

“Microsoft is increasingly focused on owning the ‘wrapper’ for AI rather than winning the race for cutting-edge models. The strategy looks even smarter now, given that its ‘partners’ are predicting the end of the world, while Microsoft can essentially offer boards of directors a form of ‘AI insurance,’ ” added analyst Melius (quoted in Investor’s Business Daily).

The investment firm also raised its earnings forecasts for Microsoft by 2% for fiscal year 2027 and by 4% for fiscal year 2028, and for the first time provided a forecast for fiscal year 2029 of $30.77 per share, which is approximately 7% higher than the consensus estimate, Investing.com added.

Microsoft shares rose 1.7% during trading on October 5. They could close the day at their highest level in nearly a year—since October 29, 2025, Barron's noted, citing Dow Jones Market Data. Since the beginning of the year, the company’s shares have risen by about 9%. By comparison, the broad-market S&P 500 index has risen 13% since the start of the year.

In late September, investment bank Piper Sandler predicted an increase in the number of Microsoft 365 subscribers thanks to the integration of OpenAI’s AI agent, Dots. Piper Sandler assigned an “Overweight” rating to Microsoft shares.

Microsoft shares enjoy virtually unanimous support from Wall Street: they have a 98% buy rating among 59 analysts, according to FactSet. Only two analysts are neutral and recommend holding, according to MarketWatch.

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