Microsoft Stock Analysis

Microsoft (ticker: MSFT) has seen a significant increase in its stock value this year, largely driven by investors’ enthusiasm for artificial intelligence. However, analysts believe there are additional factors that could contribute to its continued growth.

Potential Upside

Wells Fargo analyst Michael Turrin recently added Microsoft to the firm’s fourth-quarter Tactical Ideas List. He has given the stock an Overweight rating and set a target price of $400, implying a potential gain of 27% from the previous closing price.

Turrin highlights that despite the stock surging 32% this year, it experienced a 7% drop after the company reported fourth-quarter earnings in July. This dip in price presents an opportune time to buy, especially considering the positive factors ahead.

Stabilized Growth in Azure Cloud Computing

One promising factor is the stabilization of growth in Microsoft’s Azure cloud-computing business. Turrin expects this sector to rebound as the customer spending slump comes to an end.

Microsoft Ignite Event

Turrin also mentions Microsoft Ignite, a product event scheduled for November, which he believes could generate positive sentiment about the company. He anticipates that this event will bring several significant announcements, particularly regarding the expansion of AI-enabled Copilot offerings. In addition, Turrin expects product updates related to other AI-related services such as Azure, security, Power Platform, and more.

M365 Copilot Potential

Another analyst, Brent Thill from Jefferies, emphasizes the potential impact of Microsoft 365 Copilot—a feature that utilizes artificial intelligence as an assistant on platforms like Bing search engine and Office software suite. Thill’s what-if analyses suggest that this AI-based tool could drive an 8% increase in Microsoft’s revenue estimation for fiscal year 2025.

Thill rates Microsoft as a Buy with a $400 price target. On Monday, the stock showed a slight increase of 0.7%, reaching $317.96.