Microsoft's $100B AI Bet: Why Wells Fargo Says This Rally's Just Getting Started
Warning! GuruFocus has detected 6 Warning Sign with MSFT.
What's fueling that optimism? Copilot. Microsoft's AI assistant could be a key revenue unlock in the quarters ahead. Turrin expects Copilot to hit critical mass by next year, potentially generating $12 billion in recurring revenue on its own. His model assumes that just 10% of Microsoft 365 Commercial Cloud's 430 million addressable users adopt Copilotat a 20% average discountto deliver a $10 billion run rate. It's not a moonshot either. With generative AI embedded deeper into daily workflows, this adoption curve could steepen faster than most are modeling.
Microsoft is already up 16% in 2025, and most analysts aren't backing down. LSEG data shows 55 out of 62 analysts rate it a buy or strong buy. While some may balk at the valuation, Wells Fargo thinks the AI flywheel is only getting started. Microsoft's scale, distribution, and enterprise lock-in give it a launchpad that's hard to replicateand if Copilot hits its stride, investors may look back at today's price as just another pit stop.
This article first appeared on GuruFocus.
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