$Microsoft(MSFT)$ Stifel upgraded Microsoft to Buy from Hold, with a price target of $575, up from $530. The firm says it is increasingly comfortable with the company's ability to sustain mid/upper teens revenue growth, as open-weight model advancement has boosted management's LLM agnostic strategy. Stifel also points out that Microsoft's operating expense efficiencies are supportive of stable operating margins, while its strong cash flows should limit the need for outside financing. On the gross-margin concerns from earlier this year, Stifel notes it is now increasingly evident that Azure operational efficiency efforts, elimination of payments to OpenAI after the April contract revision, disciplined capex spending, and focused opex growth should enable Microsoft to sustain current operating margins.
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