Microsoft is intensifying its AI strategy by launching a suite of proprietary models, a move analysts say could propel its stock to new heights, Wells Fargo reported. The firm maintains an overweight rating and raised its price target to $650, implying a 44% upside from the latest close. “The company is better positioned at the software layer than many acknowledge and is making the right moves to close the gap in capacity, models and Copilot,” analyst Michael Turrin wrote in a client note. “Although Microsoft’s model development has trailed some peers, we anticipate that software and model investments will drive meaningful adoption over time, increasing their share of the business.” The upcoming “Build” conference in California is expected to showcase new AI tools, including a coding‑focused model to complement GitHub Copilot, as well as models for reasoning, transcription and image generation, according to The Information. The company is also likely to reveal more details about its lucrative collaborations with leading AI startups, which could provide a short‑term catalyst for the stock. Wells Fargo estimates that roughly two‑thirds of Microsoft’s $37 billion AI revenue stems from Azure usage by OpenAI and Anthropic, plus a revenue share from OpenAI, with the remainder coming from Microsoft 365, GitHub Copilot and other services. This outlook aligns with Street consensus, as 56 of the 60 analysts covering Microsoft rate the stock a buy or strong buy, per LSEG data. Despite a roughly 7% year‑to‑date decline that has underperformed the broader market, the analyst remains bullish.
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