Why Microsoft Stock Is Up Today

Shares of Microsoft (NASDAQ: MSFT) rallied on Friday after the technology titan unveiled new artificial intelligence (AI) capabilities for its redesigned Copilot app.

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Microsoft's new AI tools are designed to boost workplace productivity

Copilot users will now have access to the full functionality of Word, Excel, and PowerPoint within the app. There's also a new starting point called Home that integrates Chat and Cowork, an agentic AI-powered tool that can execute multi-step tasks.

Microsoft is also bringing intuitive, natural language coding tools to Copilot. Additionally, Autopilot, which Microsoft bills as a digital teammate, will add personal agent-like functionality to the app.

Analysts are getting more bullish on Microsoft's stock

Wall Street is becoming more optimistic about Microsoft's AI-fueled growth prospects. Stifel analyst Brad Reback upgraded his rating on the tech stock from hold to buy and raised his share price forecast from $530 to $575. His new price target implies potential gains of 11% for investors who buy shares near Friday's closing price of $516.17.

Reback expects Microsoft's new Copilot features to help it grow revenue by at least a mid-teens rate in the coming years. At the same time, he expects Microsoft's Azure cloud infrastructure platform to see efficiency gains as semiconductor chips, opens-source AI models, and software improve.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.