Piper Sandler, a leading broker, has a positive outlook on Microsoft (MSFT.US) due to its "AI+cloud" prospects.

Piper Sandler raised its price target for Microsoft (MSFT.US) from $465 to $485 and maintained an “overweight” rating, citing strong performance in its cloud business (especially AI).

Brent Bracelin, an analyst at Piper Sandler, said: “Microsoft’s cloud services took 13 years from 2010 to 2023 to break the $100 billion revenue milestone, including about $176 billion in total capital expenditures and lease expenses.” “By 2026, Microsoft’s cloud revenue could double to over $200 billion. Growth investors should look beyond the near-term concerns of AI overbuilding to see a broader cloud transformation still in progress that could help sustain double-digit revenue and profit growth through 2030.”

Microsoft is already one of the biggest beneficiaries of the AI boom, but Bracelin said the company would benefit even more. By 2026, AI-supported cloud revenue would rise to 63% from the current 53%, and 10% in FY2016.

Bracelin added that Azure’s annualized revenue run rate should be close to $85 billion, up 30% year-on-year, including a seven-percentage-point increase related to AI.

It is worth noting that Microsoft is expected to report its quarterly earnings for the quarter ended June 30 next week, with Wall Street broadly expecting the software company to deliver strong results due to the growth of its cloud business and investment in AI.

Meanwhile, the disruption caused by the last week’s botched update of CrowdStrike (CRWD.US) to its global Microsoft Windows computers and the resulting disruption to the global economy did not have a significant impact on the stock price of Microsoft.

As of Tuesday’s close, Microsoft was up 0.43% at $444.85.