• Microsoft's estimate-beating earnings in the fourth quarter were a 'masterpiece,' Wedbush's Dan Ives wrote.

• The firm's focus on AI propelled the company's $62 billion in total revenue, he said.

• More AI implementation means a profitable 2024, and a potential trillion-dollar opportunity.

Microsoft's fourth-quarter earnings confirm that the firm is on a straight path toward a possible $1 trillion opportunity in artificial intelligence, Wedbush Securities' Dan Ives said.

"This was another masterpiece quarter and guidance from Nadella that will send a major ripple impact across the tech world tomorrow as the AI Revolution is here," he wrote in a recent note. He also raised Microsoft's price target to $475.

The software giant pulled in $62.02 billion in total revenues, eclipsing an anticipated $61.14 billion. Earnings-per-share also beat estimates at $2.93, while net income rose 33% to $21.9 billion.

Ives credits Microsoft's implementation of AI at scale for its strong performance, citing that over 50,000 enterprises are now subscribed to Github Copilot, the firm's AI companion that suggests code to developers.

"Copilot conversions appear to be exploding across the MSFT ecosystem as the AI Revolution has begun with partners/customers lining up for the Copilot deployments," he noted.

Cloud performance also drove Microsoft's strong quarter, with the firm's AI-assisted cloud platform Azure growing 30% year over year, above the Wall Street forecast of 27.5%.

And Microsoft's central focus on AI makes the remainder of 2024 look highly promising, Ives said.

The company provided solid guidance for the next quarter, as plans to further integrate AI across its entire enterprise landscape have boosted revenue expectations for Productivity and Business Processes, Intelligent Cloud, and personal computing.

Meanwhile, efforts to improve the company's bottom line and expand margins by 1 to 2 points have brought Microsoft's expenditure forecasts below consensus.

"We believe this is the start of a multi-year initiative aimed at generating significant AI use cases for customers across the enterprise landscape to gain further efficiencies while accelerating profitable growth with Redmond leading the charge in this potential $1 trillion opportunity," he said.

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