Microsoft stock on Wednesday rose to a record high after a Wall Street analyst turned positive on the software giant based on its artificial intelligence business.
Oppenheimer analyst Brian Schwartz upgraded Microsoft stock to outperform, or buy, from perform, or neutral. He also set a price target of 600 on the stock.
On the stock market today, Microsoft stock advanced 1.4% to close at 503.51. Earlier in the session, it hit an all-time high of 506.78.
Investor attention to Microsoft's AI revenue stream is increasing as its Azure cloud infrastructure business remains strong, Schwartz said in a client note.
Microsoft is positioned as "one of the long-term AI winners in software," he said. In addition to Azure, Microsoft offers Copilot AI assistants for its software applications.
"In our view, investors are underestimating the potential for Microsoft's AI business to drive durable consumption growth for Azure and scale fast in the agentic AI era," Schwartz said.
Microsoft could generate $45 billion in AI revenue in 2026, up 134% year over year, in a bull case scenario, Schwartz said.
Microsoft stock is "our top large cap idea for playing the AI and cloud themes, and should be a core holding for long-term investors," he said.
Further, Microsoft stock is on two IBD lists: Long-Term Leaders and Tech Leaders.
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