Bank of America believes that AI agents will trigger the resurgence of a mega-cap tech name just as it enters bear territory.
In a new CNBC interview, BofA managing director Tal Liani has reissued a buy rating on Microsoft (MSFT), believing that it is significantly undervalued at current levels.
Liani says he is targeting $500 for MSFT, believing that the stickiness of its products and the rise of AI agents will be the next big catalysts for the company’s growth.
“The AI market used to be about training. Microsoft is shifting it more to about inferencing, the ability to offer agents on top of a very sticky business model of selling applications to customers.
Microsoft never had the best product in the market. If you think about cybersecurity, the products on a point-by-point basis, the products are not the best in the market. But Microsoft is the largest cybersecurity company with the fastest growth in the market because of the stickiness of the other businesses that allow you to attach, to upsell, to cross-sell other services.
Same thing will be with AI. The market is now disrupting economies. The market is creating agents. It’s all about agentic AI. Microsoft is in a great position to attach agents to existing businesses that they have, whether it’s 365 or any Dynamics or any other businesses.
I think that looking forward, the migration or the growing focus on their inferencing rather than training and the growing focus on agents, that’s the missing part in the bearish analysis and the bull case analysis.”
Liani also notes that Microsoft is already making billions of dollars from its AI model Copilot, even though the agentic AI wave is just getting started.
“AI is in the first inning. We’re just starting the cycle of offering agentic AI on top of an AI infrastructure. Right now, we’re measuring it by counting the copilot seats. Now, 15 million times $60 a month, that’s already $5.5 billion.
On top of it, there will be more seats, but also there is going to be variable revenues that will be attached to agents. There will be ways to measure it in the future. Agentic AI did not start yet. Companies are preparing for it.”
As of Monday’s close, MSFT is trading at $372, down about 23% since the start of the year. A move toward $500 indicates an upside potential of more than 34% for MSFT.
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.