MSFT Copilot Is Turning Into An ‘AI Operating System’ — Here’s What It Means For MSFT Stock, According To Oppenheimer’s Brian Schwartz

• Schwartz said Microsoft’s latest Copilot developments transform the product from a standalone chatbot into what he described as an “AI operating system.”
• He added that this shift is significant because operating systems and platforms can drive higher user engagement, create more monetization opportunities and build greater customer stickiness.
• Schwartz said that if Azure growth approaches 50% while operating at a scale exceeding $100 billion, that could drive a rerating of Microsoft stock.

Oppenheimer analyst Brian Schwartz says Microsoft Corp. (MSFT) is moving deeper into the artificial intelligence race following its latest Copilot announcement, which he believes strengthens the software giant’s investment case.

During an interview with CNBC, Schwartz said Microsoft’s Copilot announcement changes the narrative around the company as investors continue to search for clear winners in the AI era.

“Microsoft is a top pick for us. Today's announcement from Microsoft was substantial. Today's announcement helps push them deeper into that AI win category,” he said.

Microsoft shares closed 4% higher in Friday’s regular trade, while edging up by 0.3% in the after-hours session.

MSFT Copilot Becomes An ‘AI Operating System’

Schwartz said Microsoft’s latest Copilot developments transform the product from a standalone chatbot into what he described as an “AI operating system.”

He added that this shift is significant because operating systems and platforms can drive higher user engagement, create more monetization opportunities and build greater customer stickiness.

“When you're an operating system, when you're a platform provider, that leads to higher engagement, greater monetization opportunities and stickiness, and defensibility against competition,” Schwartz said.

MSFT Gets Clearer Path To Monetizing AI Usage

Schwartz said investors he spoke with were also focused on a clearer path for Microsoft to monetize heavy AI usage.

New capabilities including Cowork, co-development and Autopilot could be monetized through consumption-based pricing, credits and tokens, he said.

Under the model, users could pay a monthly subscription for routine tasks while more compute-intensive workloads generate additional consumption revenue.

Schwartz said that could create incremental growth opportunities for Microsoft 365 and Azure, supporting his expectation of business acceleration over the coming quarters.

Azure Growth Could Drive MSFT Stock Rerating, Says Schwartz

Schwartz also pointed to Azure and Microsoft 365 as the two businesses investors are watching most closely.

He said Azure is currently growing in the low-40% range and is expected to accelerate toward the mid-40% range in the current quarter. If Azure growth approaches 50% while operating at a scale exceeding $100 billion, Schwartz said that could drive a rerating of Microsoft stock.

He also highlighted Microsoft’s shift toward working with multiple AI model providers, including OpenAI and Anthropic, as part of its strategy to expand Copilot beyond traditional workplace use cases.

According to TheFly, Oppenheimer raised its price target for Microsoft to $570 from $515, while keeping an ‘Outperform’ rating. The new price target implies an upside potential of over 10% from Friday’s closing price.

What Retail Investors Think Of MSFT Stock

Retail sentiment on Stocktwits around Microsoft trended in the ‘bullish’ territory, with message volumes at ‘high’ levels at the time of writing.

MSFT stock is up 7% year-to-date and 2% over the past 12 months. The Invesco QQQ Trust (QQQ) is up 21% over the past 12 months, while the State Street Technology Select Sector SPDR ETF (XLK) is up 36%.

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