Microsoft's Trillion-Dollar Bet on AI
Microsoft has staged one of its sharpest recoveries in years, but its future momentum hangs in the balance. A crucial question lingers over the company's $115.9 billion spending spree on artificial intelligence (AI) capital expenditure: will it yield a return worthy of a mega-cap multiple or become the largest overbuild in tech history?
The answer to this trillion-dollar question will determine where Microsoft stock goes over the next 12 months, according to analysts at 24/7 Wall St. They rate the shares as 'buy' with high confidence at 90%, and predict an upside of 18.7% from its current price of $513.53.
The company's recent fiscal Q4 report delivered revenue of $90.01 billion, up 17.75%, non-GAAP EPS of $4.74, and Azure growth of 43%. Azure has crossed the $100 billion mark in annual revenue for the first time, and commercial RPO ballooned to $678 billion, up 84%.
The bull case rests on Copilot monetization accelerating alongside Azure supply catching up to demand. Microsoft's 365 Copilot has passed 30 million paid seats, with seat additions more than doubling quarter over quarter.