New Street Research initiated coverage on Microsoft (NASDAQ:MSFT) with a Buy rating and a $570 price target in a note released on Monday, citing the company’s strong positioning in the market.

According to New Street, Microsoft represents a collection of high-quality franchises that are well poised to achieve profitable growth in the low double digits for the foreseeable future.

In the realm of artificial intelligence (AI), the investment firm believes that Microsoft is strategically positioned to capitalize on the emerging Generative AI revolution. They also see limited downside risks if Generative AI becomes a point of contention or fails to meet expectations.

New Street also emphasized Microsoft’s track record of excellent execution, noting how the company has effectively enhanced its existing franchises with cloud-based features and successfully monetized them by transitioning to a subscription model. Leveraging its exceptional go-to-market strategies and ecosystem advantages, Microsoft has democratized cloud services, achieving remarkable execution.

Highlighting the transformation of strong legacy franchises, New Street expressed confidence in Microsoft’s potential to grow revenues and profits in the double digits in the foreseeable future. They suggest that this alone provides a compelling reason for long-term investors to hold Microsoft, even if the current valuation is at the higher end of the reasonable range.

Overall, New Street anticipates that Microsoft’s revenues and earnings will surpass consensus estimates by 5% and 6%, respectively, in FY27. They forecast a growth rate of 16% and 18% per year for revenues and earnings, respectively, driving an improvement in valuation multiples.