5 AI Stocks on Wall Street’s Radar: Datadog, Microsoft, and More

2. Microsoft Corp. (NASDAQ:MSFT)

Number of Hedge Fund Holders: 282

Microsoft Corp (NASDAQ:MSFT) is a top AI stock on Wall Street’s radar. On July 6, Wolfe Research cut its price target on Microsoft Corp (NASDAQ:MSFT) to $525 from $570, citing surging memory costs that lifted its FY27 capex forecast to $270 billion from $230 billion, while maintaining an Outperform rating.

Analyst Alex Zukin noted Micron’s earnings commentary on rising memory prices drove the revision, which now projects FY27 free cash flow at negative $17.4 billion versus a prior $14.7 billion positive and well below consensus. Wolfe also trimmed gross margin and EPS estimates but remains bullish on Microsoft’s AI monetization, forecasting Azure growth of 41% in FY27 and 40% in FY28, ahead of consensus, while highlighting $11.5 billion in restricted supplier investments that may offset component price pressures.

On July 2, reports emerged indicating Microsoft Corp plans to merge its consumer and enterprise versions of Copilot AI chatbots into a single platform. The merger is part of a plan to create a formidable AI platform capable of taking on Anthropic’s Claude and OpenAI’s ChatGPT.

The combined platform will include AI coding tools and new AI agents that customers will need to pay to use. Copilot already boasts of over 100 million monthly active users, signaling its ability to scale. The platform consolidation affirms plans to eliminate the awkward split personality that has defined Microsoft’s AI assistant strategy.

The consolidation comes as Microsoft seeks to take on OpenAI’s ChatGPT and Anthropic, which continue to dominate the consumer mindshare. Likewise, it faces stiff competition from Google’s Gemini, which continues to weave into every corner of the AI product ecosystem.

Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.