Wall Street can't get enough of Microsoft's artificial-intelligence revenue potential.
Firms on Wall Street for months have been hyping up Microsoft's ability to grow revenue through its cloud platform, Azure, and its AI assistant tool, CoPilot.
The latest sign of this excitement was Stifel analyst Brad Reback upgrading Microsoft to Buy from Hold with a new price target of $575 up from $530. That price target represented about 15% upside from the closing price of $498 from Tuesday.
Microsoft stock rose a fraction to $498.08 on Wednesday. Shares have fallen about 2% in September and were around 8% below their record closing high of $542.07 from Oct. 28, 2025.
Reback said in the research note that Microsoft should be able to sustain revenue growth in the mid-to upper teens with Azure and CoPilot.
The analyst added that the tech company's operating expense efficiencies are supportive of stable operating margins, while its strong cash flows should limit the company's need for outside financing.
Key to this is the expectation that Azure revenue will grow as new data-center capacity comes online and as revenue from OpenAI increases after Microsoft reworked its contract with the AI company in April. The contract includes OpenAI sharing revenue with Microsoft through 2030.
"Given the uptick in OpenAI's business, we expect recent stock momentum to continue into the second half," Reback said in the research note.
The analyst also believes that product improvements to CoPilot should sustain robust adoption.
That's all good news for Microsoft investors who have seen the company bet big on Azure and CoPilot. The company's capital spending reached $41 billion in the fiscal fourth quarter and $145 billion for the year and Wall Street thinks investors should brace themselves for heavier AI spending in fiscal 2027, which started July 1.
Microsoft stock hasn't moved much this year but if Reback's thesis is correct investors might be in for some positive business updates when Microsoft reports earnings at the end of October.
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