Microsoft Corporation (MSFT  ) is getting a boost from Oppenheimer analyst Brian Schwartz, who has upgraded the tech giant's stock rating to Outperform with a forecast of $600.

As the company navigates the rapidly evolving landscape of artificial intelligence (AI), Schwartz believes Microsoft is poised to capitalize on its strong Azure growth and innovative AI solutions like Copilot, which could significantly increase revenue in the coming years.

Schwartz evaluates Microsoft's positioning and potential risks in the emerging agentic AI landscape, including a scenario-based outlook for Copilot, broader agentic AI initiatives, and Azure-deployed partner AI revenue through fiscal year 2030.

According to the analyst, Microsoft's strong Azure growth will keep driving investor interest in its AI business, which is still not fully priced.

He sees room for upside as AI revenue scales and expects Microsoft to be viewed as "one of the long-term AI winners in software."

Schwartz also highlights Microsoft's rare ability to deliver a high-margin, high-growth "Rule of 60" profile at scale, supporting premium valuation.

Microsoft's AI Advantage Unveiled

The analyst maintains a bullish view, noting Microsoft is best positioned among peers to benefit from the continued modernization of applications via cloud and AI adoption.

In contrast, other tech players such as UiPath Inc. (PATH  ) and VMware may face share losses.

Strong AI tailwinds are expected to fuel higher Azure consumption and support Microsoft's long-term earnings growth trajectory.

Schwartz highlights that under a bull-case scenario for 2026, Microsoft's AI-related revenue could rise to $45 billion-30% of Azure's projected $150 billion total.

EPS is modeled at $17.71, with a P/E multiple of 35x, implying a stock price of $625, or 26% upside. Free cash flow could hit $94 billion, with a similar valuation yielding the same price forecast.

Projected Growth Speeds Ahead

The analyst estimates Microsoft's AI revenue could reach $67 billion by fiscal year 2027, making up 39% of Azure's total.

By fiscal year 2030, AI revenue could scale to $276 billion, representing 74% of Azure's business-driven by strong spending momentum beyond calendar year 2026.

The analyst writes that the consensus may be overly cautious about Microsoft's AI upside, especially given the modest early impact of Copilot.

Price Action: MSFT shares are trading higher by 0.94% to $501.29 at last check Wednesday.