Wells Fargo raises Microsoft price target to $700

Wells Fargo has raised its price target for Microsoft to $700, up from previous estimates, maintaining an ‘Overweight’ rating. This adjustment follows strong financial results, specifically the milestone of Microsoft’s Azure service reaching $100 billion in annualized revenue. Azure reported a 43% growth rate in constant currency.

Microsoft’s quarterly revenue reached $90.01 billion, a 17.7% increase year-over-year, with earnings per share (EPS) of $4.74, exceeding market expectations. The company’s intelligent cloud services revenue rose 32% to $39.3 billion. Analysts suggest Microsoft’s strategy of integrating AI into existing products, such as Copilot in Microsoft 365, creates high switching costs for corporate clients and sustains revenue growth.

Despite the optimism, analysts noted potential risks including competition from AWS and Google Cloud, the complexity of the OpenAI relationship, and the possibility of slow enterprise AI adoption.