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Investing.com -- Wedbush analyst Daniel Ives raised the price target on Microsoft (NASDAQ:MSFT) shares to $600 from $515, citing accelerating enterprise adoption of AI and growing momentum around Copilot and Azure monetization.
The brokerage maintained its Outperform rating and reiterated Microsoft as one of its Best Ideas.
The update follows recent field checks that point to an "accelerating" pace of deal conversions for enterprise-scale AI deployments.
Ives said use cases are gaining traction across financials, government, and retail sectors, describing this period as Microsoft’s “shining moment” as AI expedites its cloud growth trajectory.
While AI use cases in fiscal 2025 (FY25) are showing notable progress, Wedbush sees FY26 as the “true inflection year” for Microsoft.
“Based on our recent work in the field we believe the next 3 years over 70% of its MSFT installed base will ultimately be on this AI functionality for the enterprise/commercial,” Ives said.
That shift, he believes, fundamentally changes Microsoft’s growth outlook.
Microsoft’s ongoing cloud AI investments include capex guidance of $80 billion for FY25, with further expansion expected.
Wedbush estimates Copilot could contribute up to $25 billion to Microsoft’s top line by FY26. The broker estimates that “for every $100 of cloud Azure spend with MSFT the last few years, there is an incremental $50 (was $40) of AI spend” for the tech giant.
Ives also emphasized Microsoft’s edge in cloud bake-offs versus Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL), highlighting partner checks that continue to show strength around Copilot deployments.
"We view MSFT as the clear front runner on the enterprise hyper scale AI front, despite increasing competition from Amazon/AWS and Google/GCP," he wrote.
The analyst believes the market is still underestimating the full extent of Microsoft’s AI and cloud monetization opportunity, calling this “the next phase of monetization” for the company on the AI front as “more enterprises are accelerating their AI budgets and strategic footprint.”