Jefferies Doubles Down on Microsoft's AI Opportunity

Microsoft's AI strategy is gaining traction on Wall Street as Jefferies analyst Brent Thill reiterates a Buy rating and $575 price target on Microsoft. The company's revamped Copilot, with new features such as Cowork, Code, and Autopilot, could expand enterprise spending on artificial intelligence over time.

The biggest change is that Copilot is being pushed beyond simple AI assistance to perform longer, more complex work. These new features increase the number of tasks Copilot handles and how frequently customers pay for AI usage.

Thill views the announcement as incrementally positive and supportive of Microsoft's M365 thesis. He compared the new Copilot app with Meta Platforms' Muse, arguing that Microsoft may have an important enterprise advantage due to its proprietary corporate data and workflows.

Jeefferies believes that shift could make AI consumption more tangible across Microsoft 365. However, they caution that better AI capabilities do not automatically guarantee stronger consumption, as enterprises are closely monitoring AI budgets and demanding clear returns before expanding spending.