Microsoft Gets $665 Target as It Cuts Claude Use and Cramer Backs AI

• Melius upgraded Microsoft stock to Buy with a $665 target, implying 26.6% upside from its October 5 close
• Microsoft reportedly cut its projected annual spending on internal Claude use by more than one-third
• Jim Cramer backed Copilot and predicted further Microsoft stock gains, without giving a target or timeline

Microsoft stock price is drawing fresh attention for its AI business just as the company reportedly trims its own bill for outside AI tools. A Melius Research upgrade has put a $665 Microsoft price target in focus, while Jim Cramer is pointing to Copilot as a reason for further gains. Behind those bullish calls sits a more practical question for investors. How much can Microsoft earn from helping businesses put AI to work?

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Melius Sees 26.6% Upside in Microsoft Stock

Microsoft closed at $525.18 on October 5, up 1.48%, after reaching $532.35 during the session. Melius’s new target implies another 26.6% gain from that closing price.

Analyst Ben Reitzes upgraded the shares from Hold to Buy and raised his target from $465. His argument centers on companies wanting greater control over the AI systems they deploy. This includes which models handle particular tasks and how agents access business information.

According to reports, Reitzes expects that demand will strengthen Microsoft’s pricing power. He also forecasts Azure growth above 50% by the fourth quarter of fiscal 2027 as additional capacity becomes available. This is Melius’s forecast, rather than company guidance.

Microsoft Trims Its Internal Claude AI Bill

Inside Microsoft, spending discipline is getting attention too. The company had been on pace to spend at least $1 billion annually on internal use of Anthropic’s technology earlier this year. It has since reduced that projected figure by more than one-third, according to reports.

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Employees have reportedly been encouraged to use less Claude AI to lower costs and spend more time with Microsoft’s own tools. The reported reduction concerns internal consumption. It does not establish a withdrawal of Claude from customer-facing Microsoft services.

Microsoft can seek revenue from businesses using multiple AI providers while scrutinizing what its own employees spend on them.

Cramer Puts Microsoft Copilot in Focus

Cramer added a bullish call on October 5, writing on X, “It’s Co-Pilot’s time! MSFT going higher. Big move coming.” He supplied neither a price target nor a timetable in that post.

Cramer’s backing adds to the optimism around Copilot, but reaching $665 will depend on Microsoft’s results. Investors will want to see businesses keep paying for its AI tools and Azure growth translate into higher profits as Microsoft spends more to meet demand.

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