Wells Fargo Raises Its Price Target for Microsoft Ahead of Earnings

The ongoing artificial intelligence (AI) surge could continue to propel Microsoft shares higher in the coming months, according to Wells Fargo.

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In a research note released Monday, analyst Michael Turrin reaffirmed his Overweight rating on the tech giant ahead of its upcoming earnings report scheduled for July 30. Alongside the rating, he increased his 12-month price target from $585 to $600, representing a potential gain of 19.3% from Monday’s closing price.

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This bullish revision comes as Microsoft’s stock has recently climbed to near-record highs. Over the past three months, shares have jumped more than 30%, while year-to-date gains exceed 19%, outpacing the broader S&P 500 in both periods.

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“We continue to see a promising long-term trajectory for Microsoft,” Turrin noted. He pointed to the company’s consistent expansion within major information technology spending areas, its ability to capitalize on a wide range of markets, and a financial structure that supports steady margin growth. “While shares are approaching historical peak levels, we believe this is warranted given Microsoft’s leadership position in AI and its entrenched role in key markets, especially in today’s competitive environment.”

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Turrin highlighted that recent internal research signals robust and sustained demand for Microsoft’s AI-driven solutions. This strong interest is shaping not only expectations for the upcoming quarter but also the outlook for fiscal year 2026.

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One of the standout indicators, according to Turrin, is Microsoft’s aggressive capital expenditure (capex) guidance. He estimates the company could spend around $100 billion in capex during fiscal 2026, primarily aimed at strengthening its AI capabilities.

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While Turrin doesn’t anticipate a repeat of the company’s 300 basis point Azure revenue beat from the third fiscal quarter, he does see reasons for optimism. Positive feedback from Microsoft’s partners suggests that the company could surpass its current 34%–35% Azure growth guidance, thanks to strong demand for both its core cloud services and AI offerings. This would build upon the momentum from the last quarter’s acceleration in enterprise growth and improved scalability.

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Wall Street largely shares this positive sentiment. According to LSEG data, 56 out of 62 analysts currently covering the stock have either a Strong Buy or Buy rating. The remaining six analysts hold a Neutral stance, with no bearish ratings on record.

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The consensus 12-month price target for Microsoft stands at approximately $525, which still represents over 4% upside from Monday’s close. However, Turrin’s $600 target places him among the most optimistic voices on the stock.

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What’s driving the confidence? Microsoft’s early dominance in the AI space continues to impress investors. The company has integrated AI across its product lines, from enterprise software to cloud infrastructure. Tools like Copilot, which leverages generative AI in productivity applications, and AI integration within Azure, have positioned Microsoft as a front-runner in monetizing artificial intelligence at scale.

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Furthermore, Microsoft’s strategic investment in OpenAI has paid off, giving the company early access to cutting-edge AI models like GPT-4. These technologies now underpin a suite of new offerings, including AI-enhanced Microsoft 365 applications and developer tools designed for businesses modernizing their operations.

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Turrin also emphasized the resilience of Microsoft’s financials. Despite a challenging macroeconomic environment, the company has managed to maintain strong gross margins and consistent revenue growth. Its diversified revenue streams — spanning cloud, software, gaming, and enterprise services — reduce its vulnerability to downturns in any single segment.

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Looking ahead, investors are expected to closely monitor Microsoft’s performance in the upcoming earnings report. In particular, attention will likely focus on Azure’s growth trajectory, AI monetization trends, and capex plans. The company’s commentary on long-term demand for its AI ecosystem could further shape investor sentiment.

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In summary, Wells Fargo believes Microsoft remains a compelling long-term investment, particularly as enterprises increasingly shift toward AI-powered solutions. The stock may be hovering near historical highs, but Turrin and many of his peers argue that the valuation is justified by Microsoft’s dominant position in an expanding market and its consistent track record of innovation and execution.

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As the AI wave continues to redefine the tech landscape, Microsoft appears poised to be one of its biggest beneficiaries — and analysts are taking notice.

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