Piper Sandler analysts reiterated their optimistic view on Microsoft (NASDAQ:MSFT), maintaining an Overweight rating and a price target of $465. They emphasized that the company’s security segment continues to be a crucial growth driver, benefiting from strong secular trends.

The analysts highlighted that Microsoft’s Security segment has surpassed approximately 10% of sales, demonstrating broad reach across approximately 1 million customers globally. They underscored the increasing importance of security, particularly following two recent cyberattacks on Microsoft, prompting the company to launch the Secure Future Initiative (SFI). CEO Satya Nadella’s emphasis on prioritizing security in an internal memo further emphasizes this commitment.

Following a meeting with Vasu Jakkal, CVP of Microsoft Security, and Jonathan Neilson, GM and CFO of Microsoft Security, at RSA, the analysts gained a deeper understanding of the Microsoft Security business. They noted the breadth of the security portfolio, spanning six unified families, and highlighted vendor consolidation adoption drivers, offering up to 60% cost savings compared to point solutions.

Microsoft Sentinel, a key component of the security portfolio, has rapidly scaled revenue to over $1 billion since its launch in 2019. The analysts also pointed out the expanding scale of Azure, new Copilot offerings, and the significant increase in security signals collected daily (78 trillion signals compared to 8 trillion in 2021), which could further drive security monetization over the longer term.

Overall, Piper Sandler believes that Microsoft is well positioned to sustain growth in its security segment, supported by its comprehensive portfolio, cost-saving solutions, and increasing demand for cybersecurity services.