Microsoft is the best ‘pure play’ on AI adoption, says Piper Sandler
After Microsoft’s big fall following its earnings report last week, Piper Sandler is naming the stock as a top pick in software. Despite posting an earnings and revenue beat , Microsoft shares tumbled nearly 10% Thursday after investors were concerned by slowing growth in its Azure platform and other cloud services offerings. Piper Sandler, though, thinks investors are overreacting and Microsoft is still a big winner in the AI trade. “We see Microsoft as perhaps the best pure-play on AI adoption today,” wrote analyst Billy Fitzsimmons in a Monday note. “Respondents to our 2H25 CIO survey were incrementally positive on both Azure and Copilot activity. We should be buyers on the pullback post-F2Q26 results.” The shares were down another 2.6% on Tuesday despite the bullish Piper call. MSFT 5D mountain MSFT five-day chart The investment firm has an overweight rating on Microsoft shares and a price target of $600, implying more than 41% upside from Monday’s close. Fitzsimmons wrote that AI demand “will continue to outpace supply” in 2026 and 2027, which will boost both Azure and Microsoft Copilot adoption. And while Piper Sandler is worried about AI adoption for the software sector broadly, that isn’t the case with its view for Microsoft, particularly because it thinks the hyperscaler can afford adapting to the technology. “We believe Microsoft is best positioned to benefit from the elevated AI infrastructure spending,” Fitzsimmons wrote. “We also believe Microsoft is in a better financial position than some peers to make the necessary capital expenditures, with a robust balance sheet and expectations that free cash flow remains soundly positive over the next few years.”
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