Wells Fargo has kept its bullish stance on Microsoft, citing the tech giant’s accelerating growth in artificial intelligence and robust financial performance.
Analyst Michael Turrin maintained an “overweight” rating on the stock ahead of its fiscal fourth-quarter earnings report scheduled for July 30.
Turrin also raised his 12-month price target for Microsoft shares by $15 to $600, implying a potential upside of 19.3% from Monday’s close.
The upward revision follows a strong performance by Microsoft stock in recent months.
Microsoft shares have risen more than 30% over the past three months and more than 19% year to date, significantly outperforming the S&P 500 over both timeframes.
Turrin said while the shares are trading near historical highs, the premium valuation is warranted, citing Microsoft’s early lead in AI, strong positioning in multiple markets, and solid financials.
AI and cloud demand fuel optimism
Turrin’s note emphasized Microsoft’s prospects in AI and enterprise IT, describing them as “huge categories of IT spend.”
He highlighted Microsoft’s ability to monetize its market position and achieve continued margin expansion.
According to fieldwork cited in the report, demand for Microsoft’s AI tools remains strong, suggesting further momentum not only for the upcoming quarter but also for the remainder of fiscal year 2026.
The analyst also pointed to Microsoft’s guidance on capital expenditures, which suggests substantial AI investment in the year ahead.
He estimates that the company may spend as much as $100 billion in fiscal 2026, reinforcing expectations that AI will remain a major growth driver. “We still see a bright future ahead for Microsoft,” Turrin wrote, referencing both its product traction and favorable market dynamics.
While not expecting a repeat of Microsoft’s 300 basis point Azure growth beat from the previous quarter, Turrin sees potential upside to the company’s 34–35% guidance range for cloud growth.
Positive feedback from Microsoft’s enterprise partners indicates that both core services and AI offerings are experiencing strong demand.
The last quarter’s “accelerated growth” in enterprise and improved operational efficiency are viewed as further support for this outlook.
Wall Street analysts remain bullish
Microsoft remains a favorite among Wall Street analysts. According to LSEG data, 56 of 62 analysts covering the company rate the stock as a “strong buy” or “buy.”
Recently, Oppenheimer also upgraded the stock to outperform and set a target price of $600.
The remaining six analysts hold a neutral “hold” rating.
The consensus price target for Microsoft is approximately $525, suggesting a more modest 4% upside from current levels.
Despite concerns over elevated valuation levels, the broader analyst community appears to agree with Wells Fargo’s assessment that Microsoft’s leadership in AI and diversified business model position it well for sustained growth.
As the company heads into its July 30 earnings release, investor focus will be on how AI-related momentum translates into revenue and margin performance in both the near term and over the course of fiscal 2026.
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