Microsoft (MSFT) fiscal Q4 results strengthened the case for its artificial intelligence strategy, with faster "Azure growth," rising Microsoft 365 Copilot adoption and stronger visibility into returns on investments, BofA Securities said in a report Tuesday.

Azure growth accelerated to 43% from 39% in the prior quarter, while Microsoft guided to 45% growth in fiscal Q1, the firm noted. Paid Microsoft 365 Copilot seats topped 30 million, and remaining performance obligations rose 84% year over year, supporting the view that demand remains strong, the report said.

Microsoft's mix of "internal and external" AI models, along with improvements in chips and infrastructure efficiency, should "lower the cost of serving AI workloads" and support margins and returns on invested capital over time, according to the report.

BofA reiterated a buy rating on Microsoft and raised its price target to $600 from $500, citing "accelerating cloud growth" and better visibility into investment returns.

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