Wells Fargo hikes Microsoft price target, says AI business could reach $100 billion in revenue

CNBC

25-06-2025

It's still early days for Microsoft's artificial intelligence business, according to Wells Fargo. The bank reiterated its overweight rating on the technology giant and raised its price target to $585 from $565. This updated forecast is approximately 19% higher than where shares closed on Tuesday. "We still see a bright future ahead for Microsoft, driven by continued growth prospects in huge categories of IT spend, ability to further monetize strong positioning in multiple end markets, and a financial profile that continues to exhibit durable margin expansion," wrote Wells Fargo analyst Michael Turrin. "We acknowledge shares are trading near historical highs, but think this is justified given its early AI lead and strong incumbent position in a tight market, esp. favorable in the current environment." MSFT YTD mountain MSFT year to date In his upside case, Turrin believes that Microsoft's artificial intelligence business could reach $100 billion in revenue by fiscal year 2029. Microsoft has already demonstrated a history of success in this aspect by scaling its AI business to $13 billion in annual recurring revenue in less than three years, making it its "fastest product ramp ever." Turrin also expects a growing emphasis ahead on Copilot, Microsoft's AI assistant. In particular, he expects the application to reach critical mass by next year and over time bring in $12 billion in annual recurring revenue. "Across the Microsoft 365 Commercial Cloud business we assume a total addressable population of 430M users between all user tiers," the analyst wrote. "From this, we note that MSFT would only need to achieve ~10% adoption rate to reach the $10B annualized revenue run-rate mark, which also assumes an average ~20% discount." Microsoft stock has rallied 16% in 2025. Most analysts are bullish on Microsoft. LSEG data shows 55 of the 62 who cover the stock rate it a buy or strong buy.