Investors mostly have been uninterested in Microsoft stock this year, but the tech giant's artificial-intelligence strategy is working and growth in its cloud-computing platform and AI-powered assistant tool could push the stock significantly higher.

Bank of America analyst Tal Liani on Tuesday raised his Microsoft stock price target to $600 from $500 while also maintaining a Buy rating on the shares.

That price target is 19% above where Microsoft stock traded on Tuesday. Shares were down 0.6% at $504.23 and were on pace to close lower for a second straight session.

Shares have traded sideways of late. The stock was up 4.3% on the year and down 0.2% over the past 12 months as of last check. For comparison, the S&P 500 has gained nearly 12% this year.

If Liani's analysis pans out, the subdued stock performance could soon shift.

The key to Liani's increased price target was the strong growth from Azure, Microsoft's cloud-computing platform, and CoPilot, the company's AI-power assistant tool.

The analyst noted that Azure growth accelerated to 43% in the fiscal fourth quarter ended June 30 from 39% in the previous quarter. CoPilot fundamentals were also positive and showed strong growth trends, according to Liani.

The growth trajectory seems solid and Microsoft looks poised to remain in a position of strength with its AI strategy, the analyst mused.

This bullish view comes as Wall Street broadly believes investors should brace themselves for intensifying AI spending in fiscal 2027. The company's capital expenditures reached around $41 billion in the fiscal fourth quarter, hitting $145 billion for the fiscal year.

While more spending could be on the way, the growth trends in Microsoft's two main AI products should accelerate earnings and revenue.

Microsoft investors would surely welcome that dynamic and a strong run of gains for the stock. It might just happen, according to Liani.

"Microsoft is building a broad portfolio of internal and external models, allowing customers to use the most cost-effective model for each task, while governing users actions. Not every workload requires a complex and expensive frontier model, and Microsoft's approach helps optimize performance while reducing token consumption," the analyst wrote.