Microsoft Rated Buy with $500 Target as AI Automation Weighs on Shares
Bank of America reinstated Microsoft coverage with a Buy rating and $500 price target, implying 31% upside on a 24x CY2027 P/E and 15–17% yearly revenue growth. Shares fell 2.6% after AI automation tools from Anthropic and AWS stoked concerns over traditional software business disruption.
1. BofA Reinstates Coverage with Buy Rating and $500 Target
Bank of America reinstated coverage of Microsoft with a Buy rating and $500 price target, citing its central role in the AI supercycle. The firm projects 15–17% annual revenue growth over the next three years and 24–28% Intelligent Cloud expansion, supporting a 24x CY2027 P/E multiple and sustained operating margins above 46% despite rising capex.
2. Shares Decline on AI Automation Advances
Microsoft shares slid 2.6% as the broader software sector fell over 4%, driven by Anthropic’s Claude AI features that automate desktop tasks and AWS’s AI agents designed to replace specialized roles in sales and technical functions. These developments heightened investor concerns about potential disruption to Microsoft’s legacy software and services revenue streams.