Microsoft Stock (MSFT) Seen Delivering Strong Total Returns, Analyst Notes

Microsoft Corporation (NASDAQ:MSFT) is one of the AI Stocks Making Headlines This Week. On September 16, Morgan Stanley reiterated the stock as “Overweight” stating that its shares remain “attractive.”

The firm noted that Microsoft’s 10% dividend increase has reinforced its strong earnings and return profile. It lifted its quarterly dividend by eight cents to $0.91 per share, or $3.64 annualized, thereby lifting the yield to 0.7% from 0.6%.

This move “supports a durable strong teens+ total return profile at MSFT,” it said.

“Combined with teens EPS growth, this supports a durable strong teens+ total return profile at MSFT, framing an attractive risk/reward. Remain OW.”

The firm also said that the raise was “in line with prior 5-year average at ~10%,” aligning with Microsoft’s track record of annual increases between 8% and 11% over the past decade.

Microsoft’s substantial buyback capacity was also highlighted, revealing that “over $55 billion [remains] in current share repurchase authorization suggesting buybacks to continue.”

The company held more than $90 billion in cash and short-term investments as of June 30, 2025. Moreover, it anticipates generating more than $70 billion in free cash flow in fiscal 2026.

Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.

While we acknowledge the potential of MSFT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 10 AI Stocks You Should Not Ignore and 10 Trending AI Stocks on Wall Street.

Disclosure: None.