UBS has increased its price target for Microsoft (MSFT) to $525 from $500, while maintaining a Buy rating on the stock.

The firm believes that the new capacity for Azure services will be rolled out in the second half of the year, indicating that the acceleration may be more back-end loaded.

UBS remains confident in Microsoft's position in the high-quality end of the customer and workload spectrum, despite concerns about the CEO's comments on an "AI winter."

The firm has not observed significant over-building among smaller GPU cloud providers.

Sentiment around Microsoft is showing some improvement, although it remains mixed due to concerns about supply-related delays in Azure acceleration, uncertainty about the timing of capacity launches, and worries about elevated capital expenditures.

There is also apprehension about the future of Microsoft's relationship with OpenAI.