Microsoft (MSFT, Financial) received a Sector “Outperform” rating from Scotiabank on Thursday. Scotiabank’s Patrick Colville and his team noted that 2025 will be transformative as customer investments in AI accelerate on Azure and Microsoft 365 Copilot. The bank set a $470 price target on the tech giant.
Microsoft’s AI business reached an annual revenue run rate of $13 billion in Q2 fiscal 2025, with Scotiabank forecasting that this could surge to more than $50 billion by fiscal 2027. They further expect Azure’s revenue to grow from about $56 billion in fiscal 2024 to roughly $126 billion by fiscal 2027, with AI services driving over 50% of that new revenue.
Additionally, Microsoft 365 Copilot, which currently serves 5.5 million users, is projected to expand to 43 million by fiscal 2027. Copilot Studio, Microsoft’s platform for managing AI agents, also presents a significant future revenue opportunity. Moderate growth in traditional public cloud revenue is expected to balance the AI shift, easing investor concerns about revenue substitution.
This article first appeared on GuruFocus.
