- Microsoft is expected to unveil updates on Copilot, Azure, and its Surface lineup this week.
- Wedbush analysts say the stock market underestimates Microsoft's AI and cloud innovations.
- The firm says Microsoft's AI tools could generate $25 to $30 billion in revenue by 2025.
It's about to be a big week for Microsoft.
The tech giant is in the spotlight as it prepares to unveil its latest AI innovations at Build — the company's annual developer conference — following major announcements from OpenAI and Google last week.
It's also holding an exclusive event for journalists on Monday to detail its hardware vision for the future. The event will likely feature its new Surface lineup and provide information about software updates.
The conference's main event, Microsoft's Build keynote, is on Tuesday, and the company is expected to announce updates to its AI assistant, Copilot, and its cloud-computing platform, Azure, along with other Windows features.
Wedbush Securities analysts said in a Monday note that they believe the stock market has underestimated Microsoft's AI and cloud advancements. The analysts predicted that tools like Copilot will be a major source of revenue growth that could generate between $25 and $30 billion for Microsoft by its fiscal year 2025.
Dan Ives, a Wedbush managing director and senior equity analyst, believes Microsoft's big week will be about three things. Here's what's expected to be front and center.
Copilot and other AI features in Windows
Wedbush analysts expect Microsoft to roll out more Copilot and AI features into its consumer and enterprise product stack.
In its analyst note, the firm said it expects more AI integration with Microsoft apps like Excel, Teams, and Word, which could increase subscriptions and strengthen Microsoft's consumer base.
Over 70% of Microsoft's installed base could "ultimately be on this AI-driven functionality" in the next three years, the note said, which would be a major change for the company.
Ives said putting AI features into Windows will give developers the foundation to build AI use cases through Windows and, ultimately, Azure.
Showcasing AI framework in Azure
Ives said the most important aspect of the developer conference will likely be showing off Azure's AI framework.
In its analyst note, Wedbush said there could be room for Microsoft to pull more revenue from its customers. The firms' analysts estimated that for every $100 a customer spends on Azure, they'd likely be willing to spend an additional $35 to $40 on AI-related tools.
"Cloud is where the battleground is between Google, Oracle, Amazon," Ives said. "Microsoft is showing developers to look no further than between us and OpenAI."
Surface updates
Wedbush analysts expect Microsoft to unveil new laptops and Windows updates this week.
The new hardware that's expected to be announced on Monday — the day before Build kicks off — could include the Surface Pro 10 and the Surface Laptop 6, The Verge reported. Both would run on Qualcomm's Snapdragon X Elite processors as the company transitions to Arm, the outlet said.
New processors could come as Microsoft and other PC companies have been under pressure to ramp up their processing chips since Apple started creating its own. Recent reports also suggest that Apple is working on revamping its entire Mac lineup with a series of new M4 processors that put AI at their center.
But Microsoft's Surface updates may kick off the trend. Ives said the AI Surface updates could start a new PC-driven cycle that's "AI-led, from Dell to Microsoft, and ultimately to Apple as well."
Expect it to be a 'showstopper'
Microsoft has big shoes to fill following OpenAI's spring update and Google's I/O conference last week. Both companies announced updates to their AI products, showcasing their AI agents' abilities to respond to prompts with voice and act as tutors.
Google also announced a revamped search engine integrated with AI, which competes with Microsft's AI-powered Bing.
Ives said he thinks Microsoft will be a "showstopper." Because of OpenAI's collaboration with Microsoft, Ives said the conference will likely build on OpenAI's announcements from last week.
Business Insider will be liveblogging Microsoft's opening keynote on Tuesday at 12 p.m. ET, so check back with us then to follow along.
