Analyst Explains Why He's Bullish on Microsoft (MSFT) Amid 'AI Eating Software' Trend

Microsoft Corp (NASDAQ:MSFT) is one of the 10 Stocks to Buy and Sell in 2025: Top Analyst Calls.

Ben Reitzes, Melius Research managing director, said in a recent program on CNBC that SaaS companies are under threat amid the rise of AI agents. He named Microsoft Corp (NASDAQ:MSFT) among the companies set to thrive under the AI revolution.

“We just put out a piece raising our targets again on Microsoft and Oracle, and you might be like, “Oh, that’s great news, Ben.” Well, I mean, obviously we’ve been saying it for a long time, but their revenues are accelerating while all the SaaS guys are decelerating. This is not that hard. You know, I was there when hardware stocks went to eight times earnings because the cloud ate their lunch. It can always software. It can always get worse. This is a complete reversal of Andreessen and “software eating the world,” and AI is eating software.”

Wedgewood Partners stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its second quarter 2025 investor letter:

“Microsoft Corporation (NASDAQ:MSFT) was also a top contributor to portfolio performance during the quarter. The Company showed continued terrific organic revenue growth of +15% and +19% growth in operating income (foreign exchange-neutral, respectively), helped by continued seat growth in Office365. It also showed a key acceleration in its Azure cloud infrastructure business, driven by demand for AI-compute capacity. We added to our position before the strong rally, given that valuations had contracted to levels that were starting to discount away upside from Microsoft’s solid positioning in AI.”

While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.