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Bank of America Group (NYSE: BAC ) Raises Microsoft Price Target Ahead of Earnings

Bank of America Group (BofA) this week raised its
price target on Microsoft Group (NASDAQ: MSFT ) to $585 from $515 ahead of the company's earnings release on July 30, citing strong momentum in cloud infrastructure, encouraging partner feedback, and early signs of traction for its Copilot AI tool.
Bank of America Group said partner checks indicate that deal activity in the fourth quarter was "broadly in line" with the third quarter, supporting a "0-1% increase" to its $73.7 billion revenue estimate. Azure is expected to grow 35.5% year-over-year in constant currency, with "18.0 AI points," driven by cloud migrations and demand in security and data analytics.
The bank forecasts Microsoft's Productivity and Business Processes segment to grow 13% at constant currency, slightly above the base case. It noted that "partner feedback indicates steady E3/E5 upgrade activity and accelerating Copilot adoption."

For the personal computing segment, Bank of America Group expects 3.4% growth, supported by strong PC shipments.
Looking ahead, the company expects revenue growth of 14% in fiscal year 2026, in line with fiscal year 2025. While its 45.5% margin forecast could face pressure from higher capital expenditures, Bank of America Group analysts said capital expenditures will remain "broadly consistent as a percentage of revenue at 31%."
Describing Microsoft as a "first choice," the analysts said the next catalyst could be "more evidence that Copilot is becoming more important for growth." Despite a 30% gain since the third quarter, they see further upside as Azure and AI continue to gain ground.
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