Microsoft’s (MSFT) AI Push Could Be a $100B Business—Wells Fargo Explains

Microsoft Corporation (NASDAQ:MSFT) is one of 10 AI Stocks Making Waves on Wall Street. One of the biggest analyst calls on Wednesday, June 25, was for Microsoft Corporation. Wells Fargo maintained its Overweight rating on the stock and raised the price target to $585 from $565. The firm focused on the company’s ‘AI Ambitions’, noting that it is ‘still early days.’

“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. 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.”

-Wells Fargo analyst Michael Turrin.

A doctor in a laboratory, overseeing the development of Artificial Intelligence (AI).

According to Turrin, Microsoft’s AI business has the potential to reach $100 billion in revenue by fiscal 2029. The company has already scaled its AI business to $13 billion in annual recurring revenue in less than three years, which is it its “fastest product ramp ever,” despite significant capacity constraints.

The firm anticipated that the business nears $20B exiting fiscal year/June 2025 and accelerate further as constraints ease/capacity comes online.

It also expects a growing emphasis on Copilot, Microsoft’s AI assistant, looking ahead. Turrin believes that the application may reach critical mass by next year and bring in $12 billion in annual recurring revenue over time.

“Across the Microsoft 365 Commercial Cloud business we assume a total addressable population of 430M users between all user tiers. 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 Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.

While we acknowledge the potential of MSFT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.