Wedbush: The "Artificial Intelligence Revolution" bull market has just begun, and Microsoft will also join the $4 trillion market value club!
Wedbush analysts stated that Microsoft will become the next company to join the $4 trillion market value club, benefiting from the "artificial intelligence revolution." The firm maintains an "outperform" rating on Microsoft stock, with a target price of $600. Analysts expect Microsoft to achieve this goal within the next 18 months and noted that the rapid deployment of enterprise-level AI will drive growth in its cloud business. Although AI application scenarios are expected to increase in fiscal year 2025, the real growth inflection point is anticipated in fiscal year 2026
According to Zhitong Finance APP, Wedbush stated that after Nvidia (NVDA.US) broke through a market value of $4 trillion on Wednesday, Microsoft (MSFT.US) will be the next company to join this club, driven by the "AI revolution." The firm maintains an "outperform" rating on Microsoft stock, with a target price set at $600. Microsoft is also included in Wedbush's "Best Investment Ideas List."
Led by analyst Daniel Ives, the team stated, "We believe Microsoft will join the $4 trillion market value club this summer, and in the next 18 months, the market focus will shift to the $5 trillion club... as this tech bull market led by the AI revolution is still in its early stages."
Analysts pointed out that as the AI revolution deepens, the transaction conversion rate for enterprise-level large-scale AI deployments is "accelerating." Many of Microsoft's customers are currently focused on implementing enterprise-level AI applications across multiple verticals, with the financial, government, and retail sectors performing particularly well.
The analysts stated, "We firmly believe this is Microsoft's 'moment in the spotlight,' as AI will change the growth trajectory of its cloud business in Redmond."
According to their research, over 70% of Microsoft's existing customers will eventually adopt its enterprise/commercial AI capabilities in the next three years. This trend will reshape the industry landscape for CEO Satya Nadella and his team, altering the growth trajectory.
The analysts believe that while AI application scenarios are significantly increasing in fiscal year 2025, the true turning point for Microsoft's AI growth will be in fiscal year 2026.
They stated, "We believe Microsoft's stock price has not yet fully reflected the next wave of dividends from its cloud business and AI growth—Microsoft has established a strong competitive advantage in cloud business against Amazon (especially AWS) and Google Cloud."
Ives and his team noted that recent surveys of partners show that Microsoft's customers continue to have strong momentum in deploying Copilot. They expect this business to contribute nearly $25 billion in additional revenue to the company by fiscal year 2026.
The analysts stated, "The key is that as the second-order effects of the AI revolution manifest in the industry, the multiplier effect brought by 'AI father' Jensen Huang and Nvidia has just begun to be released in cloud services and software. Our core view is that the commercialization of cloud business and AI will occupy an increasingly larger share of Microsoft's revenue and ultimately drive growth and margin improvement in the coming years."
Despite facing competitive pressure from Amazon AWS and Google Cloud, the analysts still believe Microsoft is a clear leader in the enterprise-level large-scale AI space.
They emphasized, "The core value proposition of Azure and the driving force behind Microsoft's next-generation enterprise technology stack is AI... In our view, this landscape is just beginning to take shape."
