BofA Maintains Buy Rating on Microsoft (MSFT) Stock

Microsoft Corporation (NASDAQ:MSFT) is one of the Most Promising AI Stocks to Buy Right Now. On October 20, BofA analyst Brad Sills maintained a “Buy” rating on the company’s stock, which is supported by the price objective of $640.

As per the analyst, capex revisions are expected to act as a catalyst for Microsoft Corporation (NASDAQ:MSFT)’s stock. The company is taking a deliberate and strategic approach to expand the AI infrastructure, maintaining a balance between scaling capacity and ensuring energy independence.

Also, the analyst remains optimistic about the increasing visibility around the compute investments, including Microsoft Corporation (NASDAQ:MSFT)’s role in the Aligned Data Centers acquisition alongside BlackRock and Nvidia, and the durable demand for compute, demonstrated by the Azure capacity constraints.

Furthermore, the analyst opines that there are other potential catalysts, including the possibility of faster commercial Office growth, thanks to the continued momentum in E3/E5 adoption and Copilot demand through the year. Summing up, the analyst believes that Microsoft Corporation (NASDAQ:MSFT) remains well-placed to participate in the AI cycle in the application and infrastructure markets.

Wedgewood Partners, an investment management company, released its Q3 2025 investor letter. Here is what the fund said:

“Microsoft Corporation (NASDAQ:MSFT) has also spent quite heavily on capex over the past several years, having stood up more than 2 gigawatts of data center capacity over the past 12 months alone, yet it has also produced very attractive cash low returns. It exited its fiscal 2025 with almost $370 billion in gross property plant and equipment and capitalized leases, up a remarkable $260 billion from fiscal 2020. Meanwhile, gross cash low grew from $60 billion a year in 2020 to more than $140 billion per year in 2025. When we add in the rest of the assets on Microsoft’s balance sheet, we calculate its gross cash lows to be a consistent returns on capital in the high 20s. That is an extraordinary attractive return for such massive amounts of investing.”

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: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now

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