Melius Upgrades Microsoft Stock to Buy on AI Security Demand

Melius upgraded Microsoft's stock rating from Hold to Buy on Monday, establishing a price target of $665. The financial services firm based this move on increasing enterprise demand for AI security and governance solutions, noting that businesses are prioritizing secure systems for routing AI models and agents rather than relying directly on AI labs.

Analyst Benjamin Reitzes raised earnings estimates for fiscal 2027 and 2028 and introduced a fiscal 2029 estimate of $30.77 per share, which sits approximately 7% above the market consensus. Melius expects Azure to grow by more than 50% by the fourth quarter of fiscal 2027.

This shift in market demand follows heightened concerns regarding AI risks expressed by industry executives. These concerns have led to immediate interest from enterprise resellers in the security offerings provided by Microsoft.