BofA Maintains Buy Rating on Microsoft (MSFT) Stock

Core Insights - Microsoft Corporation (NASDAQ:MSFT) is identified as a promising AI stock, with a "Buy" rating maintained by BofA analyst Brad Sills and a price target of $640 [1][2] Group 1: Investment Strategy and Infrastructure - The company is strategically expanding its AI infrastructure while balancing capacity scaling and energy independence [2] - Microsoft is involved in the Aligned Data Centers acquisition alongside BlackRock and Nvidia, which enhances its compute investments visibility [3] - The company has significantly increased its data center capacity, adding over 2 gigawatts in the past year, contributing to its strong cash flow returns [5] Group 2: Financial Performance - Microsoft reported a gross property, plant, and equipment, and capitalized leases of nearly $370 billion at the end of fiscal 2025, a $260 billion increase since fiscal 2020 [5] - Gross cash flow rose from $60 billion in 2020 to over $140 billion in 2025, indicating robust financial health [5] - The company's returns on capital are consistently in the high 20s, reflecting attractive returns on its substantial investments [5] Group 3: Market Opportunities - There is potential for faster commercial growth in Office products due to the momentum in E3/E5 adoption and demand for Copilot [4] - Microsoft is well-positioned to capitalize on the AI cycle in both application and infrastructure markets [4]