Wells Fargo said momentum is shifting back to Microsoft among mega-cap technology companies due to its AI monetization and a balanced investment approach.
- Wells Fargo highlighted Microsoft Ignite as a potential catalyst for the stock.
- Microsoft will disclose Azure revenue separately from next fiscal year.
- Xbox CEO Asha Sharma recently said that ‘Xbox is not for sale.’
Microsoft (MSFT) was in focus on Thursday after Wells Fargo added the tech behemoth to its fourth-quarter “Tactical Ideas” list, highlighting several catalysts that could strengthen its AI growth story.
The brokerage raised its price target on MSFT stock to $725 from $700 and maintained an ‘Overweight’ rating, according to TheFly. This implies a roughly 41% upside from current levels.
At the time of writing, MSFT shares were trading about 0.1% higher at $513, its highest level in nearly a year. The stock has gained in five of the past six months.
Microsoft’s AI Monetization Grows
Analyst Michael Turrin said momentum is shifting back to Microsoft among mega-cap technology companies as it demonstrates AI monetization alongside a balanced investment approach.
Microsoft has invested heavily in data centers, chips and other infrastructure needed to meet AI demand. The company expects about $175 billion in capital expenditures in full-year (FY) 2026.
The Washington-based firm has been increasingly monetizing AI through Azure and Copilot. Last week, Microsoft unveiled a major Copilot overhaul, bringing together Home, Code and Autopilot. Home combines Chat and Cowork with Word, Excel and PowerPoint, while Autopilot is designed to perform tasks proactively in the background.
Microsoft CEO Satya Nadella called the revamped Copilot a “new OS for work.”
Another catalyst Wells Fargo highlighted is Microsoft Ignite, its annual technology conference scheduled for Nov. 17-20 in San Francisco.
Microsoft is also overhauling its financial reporting. Beginning in the next fiscal year, three reporting segments will be consolidated into two: Agents and Infra and Devices and Consumer. It will disclose Azure revenue separately, giving investors greater visibility into its cloud and AI business.
Xbox Restructuring Continues
Microsoft is restructuring Xbox to cut costs and improve profitability, with plans to eliminate about 3,200 jobs during FY 2027. The changes also include studio consolidation and a greater focus on major franchises such as Halo, Forza and Fable.
Despite the overhaul, Xbox CEO Asha Sharma reportedly said “Xbox is not for sale,” adding that Microsoft remains committed to strengthening the gaming business.
Retail’s Take On MSFT
Retail sentiment for MSFT on Stocktwits remained ‘bullish’ over the past 24 hours.
One user expects the stock to be a “range-bound play,” with support at $506.
View this Stocktwits post
MSFT shares have gained around 8.5% so far this year, outperforming only Tesla (TSLA) and Alphabet’s Google (GOOG, GOOGL) among its Mag 7 peers.
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