Microsoft (NASDAQ:MSFT) is still a top pick at Jefferies. The firm maintained a Buy rating and $465 per share price target on the stock in a note Wednesday.
The firm attended Microsoft 365 Copilot briefing at MSFT HQ in NYC, revealing its key takeaways. Analysts noted that the strong initial adoption of Microsoft 365 Copilot within IT departments is evidence of strong corporate interest.
"Roughly 75% of attendees, mainly IT professionals, have interacted with M365 Copilot, suggesting early adoption within IT departments has been strong, indicating corporate interest," they explained.
Jefferies also said data governance is a top focus for AI. "It is clear that organizations' data governance with AI Copilots has never been more important," wrote Jefferies. "A majority of the concerns voiced by customers, especially those in sensitive industries, were surrounding issues with insuring proper data governance when rolling out Copilot and what data MSFT holds."
On the negative side, the firm stated that it had heard some complaints regarding the latency of M365 Copilot. However, Microsoft representatives "noted that MSFT is making large investments on the backend to improve latency, investing in hardware, servers, and fiber."
Overall, Jefferies believes the Microsoft valuation remains attractive given the potential for AI upside.