Microsoft’s AI-Enhanced Software Suite Is an ‘Underappreciated’ Growth Driver, Analyst Says

While investors widely recognize Microsoft’s potential in cloud computing, a leading analyst suggests the company’s enterprise software business may be an even more significant, yet overlooked, growth engine. Brent Thill of Jefferies recently identified Microsoft 365 Cloud as the “most underappreciated” aspect of the tech giant’s current investment narrative.

Thill highlighted that Microsoft is increasingly bundling its artificial-intelligence capabilities with its legacy productivity suite, including staples like Word and Excel. This strategy creates new revenue pathways by integrating AI agents directly into existing workflows. According to Thill, this software-centric approach is less understood by the market compared to the widely praised growth potential of Azure, the company’s cloud infrastructure division.

A key component of this strategy is the strategic pricing of Microsoft E7, the enterprise’s top-tier package, which is priced at $99 per user per month. Thill noted that the shift toward E7 represents a “relatively modest step-up” for customers, particularly when compared to the status quo. Currently, many enterprises pay approximately $90 per user monthly for a combination of the M365 E5 plan and Copilot, Microsoft’s AI-powered assistant.

The analyst also pointed to Cowork, a tool offering AI assistance for specific tasks such as scheduling and calendar management. Cowork presents a substantial opportunity for usage-based revenue, supplementing Microsoft’s traditional per-user pricing model.

However, Thill acknowledged a short-term barrier: corporate clients are demanding clearer returns on investment before committing to broader AI adoption. He explained that companies prefer to tie their spending to tangible business value rather than consuming AI credits on lower-priority tasks, such as summarizing Outlook emails.

Despite these short-term pacing issues, Thill remains optimistic about long-term growth. He cited the rapid adoption of Copilot, which gained “meaningful traction” shortly after its 2023 launch, as evidence that AI integration could unfold on a faster timeline than previous upgrades to productivity suites. This momentum, he argued, will continue to raise the bar for Microsoft’s revenue potential over time.