US equity markets rallied on Wednesday after softer-than-expected inflation data eased concerns that the Federal Reserve would resume tightening monetary policy, with Microsoft and Nvidia among the biggest beneficiaries. The risk-on tone could also offer relief to cryptocurrency markets, which remain sensitive to interest rate expectations.
Microsoft shares rose about 2% after Piper Sandler raised its price target to $610 from $550, maintaining an Overweight rating. The brokerage cited higher estimates and an expanded enterprise value-to-operating cash flow multiple, pointing to growing confidence in Microsoft’s Microsoft 365 commercial cloud business. The new target implies nearly 18% upside from current levels.
Piper Sandler introduced a new framework for M365 Commercial Cloud following the company’s ‘Super App’ announcement, the rollout of the new E7 tier, and increased consumption-based pricing for Copilot and Cowork. The firm estimates each 10% shift in customer seats from E5 to E7 could generate roughly $2 billion in annualized revenue uplift. It also sees Copilot and Cowork reaching a $2 billion annualized revenue run rate by the end of fiscal 2028.
Additional support came from Stifel, which last week upgraded Microsoft to Buy from Hold and raised its target to $575 from $530. Stifel analysts led by Brad Reback said Microsoft had ‘clearly turned the corner post the June quarter print,’ citing Azure strength, lower large-language-model research intensity, and a growing contribution from OpenAI. CFO Amy Hood noted Microsoft reduced ‘dock-to-live times’ by more than 50% over the past year, allowing infrastructure capacity to convert to revenue more quickly. Copilot’s seat count reached roughly 30 million in the fourth quarter, up 10 million from the previous quarter.
Nvidia shares rose more than 1.6% after the Commerce Department reported the Personal Consumption Expenditures price index increased 3.4% annually in August, below the 3.7% forecast. Traders cut the probability of an October Fed rate hike to about 35% from roughly 45%. The broader S&P 500 gained about 0.6% and the Nasdaq Composite rose roughly 0.9%.
Cathie Wood’s ARK Investment Management disclosed a purchase of 356,681 Nvidia shares across ARKK, ARKQ, ARKW and ARKX, valued at about $81.63 million. ARK also bought 76,263 Broadcom shares worth approximately $25.56 million. Separately, CoreWeave announced it will expand its computing portfolio with Nvidia’s Vera CPU, designed for AI agent workloads, with rack-scale systems featuring 128 Vera CPUs and 11,264 cores per rack.
Nvidia also received a boost from a record $150 billion increase in its share repurchase authorization, taking remaining buyback capacity to $235 billion through fiscal 2028. AvaTrade chief market analyst Kate Leaman called the headline number striking, saying, ‘Nvidia is effectively telling the market it expects its AI cash generation to be durable, not a one-off boom.’ However, she cautioned that buyback authorization is permission, not commitment, and that if big cloud companies slow data-centre investment, the cash flows funding the program could come under pressure.
For digital assets, the combination of cooling inflation, lower Treasury yields, and reduced near-term rate hike odds creates a more favorable macro backdrop. While the news is primarily about equities and AI infrastructure, cryptocurrency markets often respond positively to looser financial conditions and improved risk appetite.
