Microsoft Stock (MSFT) Rises as Leading Analyst Forecasts Azure AI Boom

Shares in tech giant Microsoft (MSFT) climbed higher today as a leading analyst upped his price target on an upcoming AI boom.

AI Scale

Five-star TipRanks-rated analyst Derrick Wood of TD Cowen shifted his price target on the MSFT stock from $490 to $540. He has a Buy rating on the stock.

Wood said annual recurring revenues at Azure AI – a suite of cloud-based AI services on MSFT’s Azure computing platform – could scale from around $4 billion in 2024 to around $24 billion in 2026.

Indeed, Wood said this leap was “conservative with solid room for upside.”

Wood said OpenAI would be a key driver, comprising 40% of Azure AI revenues in full year 2025 as MSFT benefits from its 20% revenue share agreement and OpenAI’s spend on Azure GPU infrastructure for inference workloads.

The other driver of Azure AI revenues will come from MSFT’s own offerings like Azure OpenAI Services, Azure AI Foundry, and GitHub Copilot.

Azure Isn’t Blue

Wood added that as AI revenue is rapidly building in the Azure model, especially OpenAI’s contribution, this will boost total Azure growth.

“We think a return to Azure upside trends and firmer growth in the mid-30% level should help drive a stronger narrative around Azure and greater fund flows back into MSFT,” he said. Wood sees growth in Azure itself, with revenues growing from $52 billion to $77 billion.

This builds on other bullish AI talk from analysts looking at MSFT stock. This includes Kirk Materne of Evercore ISI, who recently said Microsoft’s AI business could grow into a $110 billion opportunity by 2028.

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