Hey, good news, Microsoft (MSFT) , you made the list.
The software giant got some high praise indeed from Wedbush analyst Dan Ives, who included the Redmond, Wash., company on the investment firm's list of five top tech picks for the second half.
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The other names were AI-chip heavyweight Nvidia (NVDA) , Facebook parent Meta Platforms (META) , data-analytics-software company Palantir (PLTR) , and electric-vehicle maker Tesla (TSLA) .
“The poster childs for the AI Revolution are led by Nvidia and Microsoft as both are foundational pieces of building on the biggest tech trend we have seen in our 25 years covering tech stocks” on Wall Street, Ives said.
The analyst said in a research note that he was expecting a very strong June quarter from Microsoft, “as Azure and Intelligent Cloud upside remain the core drivers of this tech stalwart with AI driving the show.”
“With over 15% of cloud services now including some form of AI, this technology has become a driver for cloud projects, with more integrations of models into cloud products and services to further drive the top line at lower costs,” he said.
“[We] believe AI and cloud driven spending will be a high priority area and software should outperform other subsectors of tech.”
Image source: Ben Kriemann/Getty Images
Analyst sees Microsoft in the driver's seat
This dynamic clearly benefits the hyperscalers — the giant providers of cloud services and infrastructure, such as Microsoft, Google (GOOGL) and Amazon (AMZN) — front and center, the analyst said.
In “a world of tariff uncertainty, these cloud and AI projects are being greenlighted, as C- level management know [that] if they slow down these projects, the strategic impact could be hard to recover from.”
Ives said that over the past month, in numerous conversations with Microsoft customers and partners, “it has become crystal clear to us that the monetization opportunities around deploying AI in the cloud is a transformational opportunity across the industry, with Redmond in the driver's seat.”
Related: Veteran analyst issues eye-popping Microsoft stock price target
The analyst, who has an outperform rating and $600 stock price target on MSFT, said his thesis remained that cloud and AI monetization is going to comprise a bigger and bigger piece of Microsoft going forward and will ultimately spur growth and margins over the coming years.
Microsoft “is just hitting its next phase of monetization on the AI front, and more enterprises are accelerating their AI budgets and strategic footprint with Redmond into fiscal 2026,” Ives said. Wall Street is “not fully appreciating the growth story.”
Microsoft CEO Satya Nadella touted the allure of Azure during the company’s third-quarter earnings call in April.
“When it comes to cloud migrations, we saw accelerating demand, with customers in every industry, from Abercrombie & Fitch to Coca-Cola and ServiceNow, expanding their footprints on Azure, “ he said.
“And we remain the cloud of choice for customers’ mission critical VMWare, SAP and Oracle workloads, with more regional availability than any other hyperscaler.”
Azure is a key driver of Microsoft's Intelligent Cloud segment, which also includes server products and other cloud services.
The Intelligent Cloud segment's fiscal-Q3 revenue surged 21% to $26.8 billion.
The tech giant said in April that it was expecting Azure’s fourth-quarter revenue to grow between 34% and 35%. driven by strong demand for the portfolio of services.
Cantor sees momentum for Microsoft
Microsoft is scheduled to report quarterly results on July 30. The shares are up nearly 20% this year and up 12% from this time in 2024.
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Mizuho analyst Gregg Moskowitz raised the investment firm's price target on Microsoft to $540 from $500 and affirmed an outperform rating as part of an earnings preview for the group.
Moskowitz said its quarter checks were good overall, with cybersecurity demand “generally healthy” and AI adoption “very strong.”
But several contacts noted slightly more deal pushouts than expected, which could constrain fundamental upside in the quarter, the analyst said.
Moskowitz's favorite stocks to own ahead of the print are Cyberark Software (CYBR) and Microsoft
Cantor Fitzgerald raised its price target on Microsoft to $581 from $512 and maintained an overweight rating on the shares.
The investment firm said it didn't expect the same positive surprise from last quarter regarding accelerated Azure growth since the economic backdrop in April was tepid, The Fly reported.
Cantor said, however, that it saw overall momentum continuing, with its channel checks mostly positive in the near term and for the second half of 2025.
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