Shares of Microsoft were on pace Tuesday for a record high after reclaiming a market capitalization of more than $4 trillion on Monday. If Microsoft can get solid returns on its artificial-intelligence spending, the stock could keep moving higher.

Microsoft stock rose 1.7% to $549.74 on Tuesday and was on pace for a record closing high and to notch its highest market valuation ever, according to Dow Jones Market Data.

If the stock move holds, it would be the first record closing high since Oct. 28, 2025 when Microsoft shares closed at $542.07.

The stock ended Monday up about 1.2% at $541.15 and had a market value of $4.02 trillion, marking the first time the company had a market capitalization above $4 trillion since October 2025.

Many Wall Street firms, however, believe there's more upside based on that Microsoft is well positioned to boost revenue through its cloud platform, Azure, and Copilot, its AI assistant tool.

That excitement went up a notch recently after the company recently introduced new capabilities for Copilot that will connect different tools to build, customize, and scale AI across work flows.

Microsoft has bet big on Azure and Copilot with capital spending reaching $41 billion in the fiscal fourth quarter and $145 billion for the fiscal year. Wall Street thinks investors should brace themselves for heavier AI spending in fiscal 2027, which started July 1.

That AI spending could be worth it for Microsoft investors.

Barclays on Tuesday raised its Microsoft price target to $600 from $512 and maintained an Overweight rating on the shares. The price target raise came as part of an earnings overview for software stocks. That price target represented 11% upside from the closing price of $541.15 on Monday.

The bulk of Wall Street is in agreement that Microsoft stock is likely to keep rising. The stock has an average Buy rating with a price target of $584.48, according to the 59 firms polled by FactSet.

Morgan Stanley analyst Adam Wood on Monday maintained his Overweight rating on Microsoft with a price target of $600.

Wood said in the research note that Microsoft is poised to retain its lead in generative AI spending "intentions" and that the company is "well positioned to monetize a multi-model world across its full stack."

"The strategic opportunity for Microsoft is to monetize enterprise AI workflows at multiple points across the stack, with less dependence on any individual model winning," Wood said.