Microsoft's AI Potential Drives Upgrade and $600 Price Target from Oppenheimer

Microsoft gets an upgrade from Oppenheimer, which says AI potential not fully priced in

Potential gains from artificial intelligence are still not fully baked into Microsoft , according to Oppenheimer. The firm upgraded Microsoft to outperform from perform. Its a $600 per share price target calls for nearly 21% upside from Tuesday's close. Microsoft is one of the key bellwethers for the AI boom, given the company's strategic partnership with ChatGPT parent-company OpenAI. "Investors' attention on the ramp of Microsoft's AI revenue stream will only increase as Azure's growth remains strong, offering not only valuation support (akin to AWS underpinning Amazon's valuation), but also upside potential as this revenue stream continues scaling fast and investors embrace Microsoft as one of the long-term AI winners in software," analyst Brian Schwartz said. MSFT YTD mountain Microsoft stock in 2025. "Sustaining robust growth in its AI business is not fully in the stock, nor is a reacceleration in Azure's growth in FY26," he added. "Further, the strength of the AI cycle should drive robust usage of Azure, and support MSFT as a good earnings compounder." The analyst also said that investors may be overlooking the full scale of Microsoft's ability to monetize AI, and specifically pointed to the company's cloud segments as a way to do so. "Investors are underestimating the potential for Microsoft's AI business to drive durable consumption growth for Azure and scale fast in the agentic AI era given how underwhelming the value proposition and use cases for Copilot proved," he said. Microsoft has advanced more than 17% in 2025. The analyst cautioned, however, that there is ample risk tied to the AI cycle for Microsoft, especially if enterprise customers start to view investments in AI as mostly intended for software that is not yet available to buy. "This development would impact the usage and financials outcome for Azure, and diminish the credit Microsoft is currently receiving in multiples as a perceived AI winner," Schwartz said.

AI Might Just Make Microsoft The Top Dog For Years With $276 Billion Revenue Potential - Microsoft (NASDAQ:MSFT)

Microsoft Corporation MSFT is getting a boost from Oppenheimer analyst Brian Schwartz, who has upgraded the tech giant's stock rating to Outperform with a forecast of $600. As the company navigates the rapidly evolving landscape of artificial intelligence (AI), Schwartz believes Microsoft is poised to capitalize on its strong Azure growth and innovative AI solutions like Copilot, which could significantly increase revenue in the coming years. Schwartz evaluates Microsoft's positioning and potential risks in the emerging agentic AI landscape, including a scenario-based outlook for Copilot, broader agentic AI initiatives, and Azure-deployed partner AI revenue through fiscal year 2030. Also Read: Microsoft, Replit Team Up To Bring 'Vibe Coding' To Enterprise: AI Agents Let Anyone Build Software, 'No Code Required' According to the analyst, Microsoft's strong Azure growth will keep driving investor interest in its AI business, which is still not fully priced. He sees room for upside as AI revenue scales and expects Microsoft to be viewed as "one of the long-term AI winners in software." Schwartz also highlights Microsoft's rare ability to deliver a high-margin, high-growth "Rule of 60" profile at scale, supporting premium valuation. Microsoft's AI Advantage Unveiled The analyst maintains a bullish view, noting Microsoft is best positioned among peers to benefit from the continued modernization of applications via cloud and AI adoption. In contrast, other tech players such as UiPath Inc. PATH and VMware may face share losses. Strong AI tailwinds are expected to fuel higher Azure consumption and support Microsoft's long-term earnings growth trajectory. Schwartz highlights that under a bull-case scenario for 2026, Microsoft's AI-related revenue could rise to $45 billion -- 30% of Azure's projected $150 billion total. EPS is modeled at $17.71, with a P/E multiple of 35x, implying a stock price of $625, or 26% upside. Free cash flow could hit $94 billion, with a similar valuation yielding the same price forecast. Projected Growth Speeds Ahead The analyst estimates Microsoft's AI revenue could reach $67 billion by fiscal year 2027, making up 39% of Azure's total. By fiscal year 2030, AI revenue could scale to $276 billion, representing 74% of Azure's business -- driven by strong spending momentum beyond calendar year 2026. The analyst writes that the consensus may be overly cautious about Microsoft's AI upside, especially given the modest early impact of Copilot. Price Action: MSFT shares are trading higher by 0.94% to $501.29 at last check Wednesday. Read Next: Tesla Is Getting Burnt By Copper's God Candle Image via Shutterstock MSFTMicrosoft Corp$500.760.83%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum69.82Growth49.77Quality30.81Value13.44Price TrendShortMediumLongOverviewPATHUiPath Inc$13.21-0.04%Market News and Data brought to you by Benzinga APIs