Wells Fargo Raises Microsoft's Target Price to $650, Positive on AI Self-Development Strategy
Miles Bennett
Wells Fargo raised its Microsoft target from $625 to $650, implying roughly 44% upside, arguing the company's AI model investments are starting to pay off and the market undervalues its software-layer competitiveness.
Why is Wells Fargo doubling down on Microsoft now?
Target price lifted from $625 to $650, with an overweight rating maintained.
Analyst Michael Turrin argues the market underestimates Microsoft's competitive position in the software layer, and the company is closing the gap in compute, models, and Copilot.
This means → Wells Fargo isn't betting Microsoft leads today — it's betting Microsoft is catching up faster than the market expects.
Where does Microsoft's $37 billion AI revenue come from?
Wells Fargo estimates that of Microsoft's roughly $37 billion AI business, two-thirds comes from OpenAI and Anthropic consuming Azure cloud capacity, plus revenue-sharing with OpenAI.
The rest comes from Microsoft 365, GitHub Copilot, and other AI services.
In plain terms = most of Microsoft's AI revenue today comes from "running other people's models." Its own-product AI monetization is still the smaller slice — and that's exactly where Wells Fargo sees the growth runway.
What could the Build conference deliver this week?
Microsoft hosts its Build developer conference in California this week and is expected to unveil a wave of AI tools.
Per The Information, releases may include a coding model paired with GitHub Copilot, plus models for reasoning, speech transcription, and image generation.
This means → Build is the near-term catalyst Wells Fargo is watching — a strong showing could move the stock directly.
Where does Wall Street stand — and why is the stock still down?
Of the 60 analysts covering Microsoft, 56 rate it buy or strong buy — Wells Fargo's bullish call aligns with the consensus.
Yet Microsoft shares have fallen nearly 7% year-to-date, lagging the broader market.
This reflects a tension: near-unanimous analyst conviction, but a stock that hasn't followed — the market may be waiting for proof that AI spending actually converts into profit.
Content is for reference only, not financial advice.