Here’s What Jefferies Think About Microsoft (MSFT)

Core Viewpoint - Microsoft Corporation (NASDAQ:MSFT) is considered one of the best long-term technology stocks to buy, with a Buy rating and a price target of $675 set by Jefferies after discussions with the company's head of investor relations [1]. Group 1: Company Strengths - Microsoft's Azure and Microsoft 365 are pivotal in consolidating enterprise AI spending, with Microsoft 365 serving over 450 million paid users, indicating a strong enterprise distribution network [2]. - Jefferies identified three core strengths: the expansion of Microsoft 365's total addressable market using AI, AI margins surpassing cloud margins at similar growth stages, and consistent infrastructure monetization regardless of specific AI agents or models [2]. Group 2: Valuation Insights - Microsoft is currently trading at approximately 21 times its fiscal 2027 earnings per share, which is below its 10-year average of 23.5 times, making it an attractive investment opportunity [3]. - The firm argues that Microsoft should not be valued at its 10-year low of around 15 times forward earnings, given the enhanced platform capabilities developed over the past decade [3].