Microsoft spent most of this year being punished for spending too much. The stock fell more than 20%. Analysts cut targets. The narrative shifted from AI winner to AI victim.
Wells Fargo was part of that story. In mid-July, it trimmed its own target to $625 from $650, nervous about how much capital was going out the door.
Then July 29 happened. Azure crossed $100 billion. The stock jumped nearly 9% in after-hours trading. And Wells Fargo analyst Michael Turrin just set the highest price target on Microsoft on Wall Street.
Turrin raised his price target to $700 from $650 on Aug. 12 and kept his Overweight rating, according to TipRanks. No other major firm covering Microsoft has gone that high. The average across 35 analysts sits at $562. Wells Fargo is $138 above that. With the stock at $503.81, the new target implies roughly 39% upside.
Turrin put it simply. "Premium is justified." Microsoft got to AI enterprise first. Its grip on corporate software is deep enough that even competitors end up integrating with it. That combination, he said, earns a multiple the stock isn't getting right now. He ran it at 30 times forward earnings and landed at $700.
Turrin isn't pretending the risks don't exist. AWS and Google Cloud are not going away. Regulatory heat around Microsoft's cloud and AI dominance is real. The OpenAI relationship is expensive and complicated. And enterprise AI adoption could easily move slower than the current booking numbers imply.
He listed all of it. Then he said $700 anyway, as TheStreet reported.
Wells Fargo cut the target in July because the AI spending looked like it might be running ahead of the revenue. Azure crossing $100 billion in annualized revenue and growing 43% in constant currency on July 29 was the answer to that concern.
Not just a round number — evidence that the infrastructure spend is producing real cloud acceleration.
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Microsoft reported $4.74 in adjusted earnings per share on $90.01 billion in revenue for the quarter, beating the $4.24 and $87.63 billion consensus. The stock jumped.
Worth noting: a $3.2 billion gain on the Anthropic investment added $0.27 to diluted EPS. Part of the beat was one-time. But Azure's number and the guidance were what actually moved the conversation, and those are what Turrin is betting on with $700.
Azure at $100 billion matters for a second reason beyond the headline. It tells you the market for cloud AI services is large enough to absorb what Microsoft has been building.
The concern heading into earnings was that data center construction was running faster than enterprise demand could justify. The July 29 numbers pushed back on that. Intelligent Cloud revenue climbed 32% to $39.3 billion in a single quarter. That is not a business that looks like it is running out of customers.
Wells Fargo cut to $625 from $650 in mid-July. It raised its Microsoft target back to $650 in late July after the company's Q4 earnings cleared the bar that investors had been nervous about. It cut again earlier over capital spending concerns. Then July 29 came, and now the target is $700, a new Street high, in six weeks.
That whipsaw reflects how unsettled this trade has been. Microsoft was down more than 20% for the year heading into earnings. The AI spending story had become a liability. One quarter didn't fix everything, but it shifted enough that Wells Fargo is now sitting $138 above the analyst average and calling the premium justified.
Turrin's note isn't just about Azure.
Microsoft's advantage is that it sells AI across a product base most enterprise customers already pay for. Copilot sits inside Microsoft 365. Azure AI services run inside cloud contracts. Security products are getting AI layered in.
The company doesn't need to convince customers to try something new. It needs to convince them to upgrade what they already use.
That is a different kind of sales motion than what most AI pure-plays are running. It is also more defensible. Switching costs inside Microsoft's enterprise stack are high.
A company that has standardized on Teams, SharePoint, Azure, and Dynamics is not easily pulled away by a competitor offering a cheaper AI assistant. Turrin is betting that stickiness turns into revenue growth as AI adoption inside those existing contracts keeps accelerating.
GitHub Copilot alone had 50 million users as of Microsoft's latest count, a number that has been climbing fast as developers standardize on AI-assisted coding. That product generates subscription revenue directly, separate from Azure usage.
It is exactly the kind of AI monetization that shows up in recurring revenue rather than one-time deals, and it is one of the reasons Turrin sees the premium as earned rather than speculative.
The stock is still down more than 20% for the year. The capital expenditure line is still enormous. Full-year 2026 capex guidance sits between $130 billion and $145 billion. Microsoft is spending at a scale that would have seemed implausible three years ago, and the payoff is still not fully visible in free cash flow.
What has changed since July 29 is that the revenue side of the equation got strong enough to shift at least one major Wall Street firm from cautious to its highest target ever.
Whether that view spreads to the rest of the analyst community over the next couple of quarters depends on whether Azure keeps growing at 40%+ and whether Copilot monetization continues accelerating.
For investors watching Microsoft, the Wells Fargo note is the bullish case at its clearest. The bear case is still the capex.
The debate between them is probably not getting resolved before Microsoft reports its next quarter. Until then, the $140 gap between Wells Fargo's $700 and the rest of Wall Street's $562 average is the most honest picture of where the disagreement lives.
Related: Microsoft makes a controversial decision that changes its AI story
This story was originally published by TheStreet on Aug 13, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.