Microsoft Stock Hits New High: Analysts Say $4 Trillion Valuation May Be Within Reach As AI Upside Still Underappreciated

Microsoft (MSFT) stock may have been relegated to the second spot in terms of valuation, but it could have further legs to run, thanks to the software giant integrating its artificial intelligence (AI) into its products and applications. 

The AI-fueled rally has helped Microsoft stock to gain 20% this year, with the stock trading at a record high.  

The Satya Nadella-led company is also benefiting from internal use of the AI technology, Microsoft’s Chief Commercial Officer Judson Althoff said in an internal presentation, according to Bloomberg, citing people familiar with his remarks.

Althoff said AI tools have boosted productivity across various functions, including sales, customer service, and software engineering. The executive quantified Microsoft’s AI savings as exceeding $500 million in its call centers in 2024, with the technology’s usage helping to improve both employee and customer satisfaction.

The report stated that Microsoft was starting to utilize AI to interact with smaller clients, which helped the company generate tens of millions of dollars.

Althoff also said at Microsoft that AI generated 35% of the code for new products, expediting launches. Allaying employee concerns regarding the employment of AI, he said AI could make them more effective as sellers. 

The use of Microsoft’s Copilot AI assistant helped each salesperson find more leads, close deals quicker, and generate 9% more revenue, he added.

The report of Microsoft’s productivity gains from AI came close on the heels of Oppenheimer upgrading shares of the company to ‘Outperform’ from ‘Perform,’  citing the company’s strong positioning in AI.

The research firm has a $530 price target for Microsoft stock, The Fly reported. 

Analyst Brian Schwartz attributed the action to his view that the company’s current stock price does not fully factor in the “sustaining robust growth” of the AI business and a potential reacceleration in Azure revenue in fiscal year 2026.

“Investors’ attention on the ramp of Microsoft’s AI revenue stream will only increase as Azure’s growth remains strong,” the analyst said, adding that it will not only offer valuation support, but “also upside potential as this revenue stream continues scaling fast and investors embrace Microsoft as one of the long-term AI winners in software.”

In late June, Wedbush analyst Daniel Ives upped the price target for Microsoft stock to $600 from $515, attributing this optimism to  bullish AI checks that suggested a massive adoption wave of Copilot and Azure monetization.

On Stocktwits, retail sentiment toward Microsoft stock remained ‘bearish’ (42/100) by late Wednesday, with the degree of negativity increasing from the previous day. The message volume was at a ‘normal’ level.

In a separate note issued in June, Ives flagged Nvidia and Microsoft as two companies that would hit a $4 trillion valuation this summer. “Then over the next 18 months, the focus will be on the $5 trillion club....as this tech bull market is still early being led by the AI Revolution,” he added. 

Microsoft ended Wednesday’s session up 1.39% at $503.51, giving the company a market capitalization of $3.742 trillion. To hit the coveted mark, Microsoft’s stock has to add another $35 to its Wednesday closing price.

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