Wedbush: The “artificial intelligence revolution” is just beginning, and Microsoft (MSFT.US) will also join the $4 trillion market capitalization club!

The Zhitong Finance App learned that after Nvidia (NVDA.US) surpassed $4 trillion in market capitalization on Wednesday, Microsoft (MSFT.US) will be the next company to join this club, and the driving force behind it is the “artificial intelligence revolution.” The agency maintained a “outperforming the market” rating for Microsoft stock, and the target price was set at $600. Microsoft was also selected on Wedbush's “Best Investment Ideas List”.

A team of analysts led by Daniel Ives said, “We believe Microsoft will join the $4 trillion market capitalization club this summer, and the market focus will shift to the $5 trillion club in the next 18 months... because the tech bull market led by the AI revolution is still in its early stages.”

Analysts pointed out that with the deepening of the artificial intelligence revolution, the transaction conversion rate of large-scale enterprise-level AI deployments is “increasing at an accelerated pace.” Many Microsoft customers are currently focusing on implementing enterprise-level AI applications in multiple vertical fields, with the financial, government, and retail industries performing particularly well.

The analyst said, “We are convinced that this is Microsoft's 'highlight moment' and that artificial intelligence will change the growth trajectory of the cloud business in Redmond (where Microsoft is headquartered).”

According to their research, over the next three years, over 70% of Microsoft's existing customers will eventually adopt its enterprise/commercial AI capabilities. This trend will reshape the industry and change the growth trajectory for CEO Satya Nadella and her team.

Analysts believe that although AI application scenarios are increasing significantly in FY2025, FY2026 is the real inflection point for Microsoft's AI growth.

They said, “We believe that Microsoft's stock price has yet to fully reflect the next wave of dividends from its cloud business and AI growth — in competition with Amazon (especially AWS) and Google Cloud, Microsoft has formed a strong competitive advantage in the cloud business.”

Ives and his team pointed out that recent partner research shows that Microsoft customers continue to deploy Copilot strongly. They expect that by fiscal year 2026, this business will contribute an additional nearly $25 billion to the company's revenue.

The analyst said, “The key point is that as the second-order effects of the artificial intelligence revolution become apparent in the industry, the multiplier effect brought by the 'Godfather of AI' Hwang In-hoon and Nvidia has only just begun to be unleashed at the cloud service and software level. Our core view is that the commercialization of cloud business and AI will account for an increasing share of Microsoft's revenue, and ultimately drive growth and profit margins over the next few years.”

Despite competitive pressure from Amazon AWS and Google Cloud, analysts believe Microsoft is the clear leader in enterprise-level hyperscale AI.

They emphasized, “The core driving force behind Azure's core value proposition and Microsoft's next-generation enterprise-grade technology stack is artificial intelligence... In our opinion, this pattern is only just beginning to take shape.”