Evercore ISI sees a rebound ahead for tech giant Microsoft (MSFT) after its shares slid 7% in the final weeks of 2024 and dropped another 0.7% on the first day of 2025. The investment firm, led by five-star analyst Kirk Materne, believes that Microsoft’s key drivers include an expected boost in Azure growth in early 2025. It also expects a slowdown in capital spending–which would lead to stronger free cash flow–and the increased adoption of Copilot, Microsoft’s AI tool.
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Evercore reviewed four instances in the past four years where Microsoft underperformed compared to the S&P 500 (SPX) and iShares Tech-Software ETF (IGV). In 2024, while the broader indices rose 25% and 30%, respectively, Microsoft’s stock only climbed 12%. Materne noted that Microsoft historically bounces back after underperforming, with an average 22% outperformance the following year and a 42% absolute gain. The firm attributes this resilience to Microsoft’s broad enterprise offerings, reliable recurring revenue, and strong balance sheet.
Evercore ISI currently has a Buy rating on Microsoft with a $500 price target, which equates to an 18.5% gain from current levels. It’s worth noting that, so far, Materne has enjoyed an 86% success rate on MSFT stock, with an average return of 21.9% per rating.
Is MSFT Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 27 Buys and two Holds assigned in the last three months. After a 16% rally in its share price over the past 12 months, the average MSFT price target of $503.61 per share implies 19.3% upside potential.
