Microsoft remains one of Jefferies’ favorite megacap stocks despite a tough start to 2025. Year to date, the Windows and Xbox parent is down 7%, more than three times the 2.1% loss in the S & P 500 . Over the past 12 months, Microsoft shares have dropped 9% compared to an 8% gain in the iShares Expanded Tech-Software Sector ETF . MSFT .SPX YTD mountain Microsoft shares versus the S & P 500 in 2025 In a research note on Sunday, Jefferies’ analyst Brent Thill said “recent weakness has created attractive risk/reward. … We believe the recent selloff represents an attractive entry point due to derisked valuation.” Thill holds a buy rating on Microsoft and his $550 price target implies the stock will soar 41% over the coming year from Friday’s close. The analyst is confident that Azure, Microsoft’s cloud computing platform, will continue to gain market share against competitor Amazon Web Services due to artificial intelligence-powered growth. Fundamentals for Microsoft 365 Commercial Cloud are also strong, Thill noted. In addition, Microsoft’s profit margins are expected to continue growing despite its ramp-up of AI investments, Thill added. “MSFT’s margin in the mid-40s are still well above large cap peers in the mid 30s,” Thill said. Thill isn’t the only analyst on Wall Street who is bullish on Microsoft. Goldman Sachs’ Kash Rangan on Monday reiterated a buy rating and $500 price target on the company led by CEO Satya Nadella, citing the company’s “fungible and durable capex investment strategy.” — CNBC’s Michael Bloom contributed to this report.
