Scotiabank initiated coverage on Microsoft (MSFT, Financials) with a Sector Outperform rating and set a $470 price target, citing the company’s artificial intelligence growth prospects.
For AI investments across Microsoft’s Azure cloud platform and Microsoft 365 Copilot services, analysts at Scotiabank anticipate 2025 to be a turning point. The company underlined that 60% of businesses now use public cloud basic models, therefore positioned Microsoft to gain from more AI investment.Scotiabank estimates that Microsoft’s AI-related income in the second quarter of fiscal 2025 will be $13 billion and will rise to $50 billion by fiscal 2027. With AI services accounting more than half of Azure’s predicted total income over fiscal 2024 from $56 billion to about $126 billion by fiscal 2027.From 5.5 million users now to 43 million by fiscal 2027, use of Microsoft 365 Copilot is also predicted to rise. Still in its early phases, Copilot Studio, Microsoft’s AI agent platform, is yet widely used in businesses.Microsoft’s Copilot Studio and Salesforce Agentforce are leading systems in AI-driven automation, Scotiabank observed. Only 30% of chief information officers have allocated resources, therefore restricting near-term revenue effect from corporate AI investments even as 50% of them are thinking about using AI agents in 2025.Scotiabank analysts predict that even with Microsoft’s AI expansion, conventional public cloud growth might slow down. Although Microsoft’s stock has dropped over 9% over the previous year, the company said that revenue created by artificial intelligence could offset investor worries.
This article first appeared on GuruFocus.
