Microsoft shares are on pace for their best quarter since 1991, and Wall Street sees room for more gains.

Microsoft stock rose 2% to $518.18 on Wednesday. Shares have risen 39% in the third quarter and were on pace for their best quarterly performance since the first quarter of 1991, according to Dow Jones Market Data. Many Wall Street firms, however, believe there's more upside.

The stock advanced Wednesday following OpenAI's DevDay event on Tuesday, when the ChatGPT maker introduced its artificial-intelligence agent called Dots.

"We think one of the few positive read-throughs was MSFT, given Dots will integrate with Microsoft Agent 365," Piper Sandler analyst Billy Fitzsimmons said in a research note, referring to Microsoft's control plane for AI agents, designed for information technology and security administrators.

Fitzsimmons said that based on this integration with OpenAI, he's "constructive" on Microsoft's ability attract more customers to its enterprise-grade Microsoft 365 E7 tier, which carries a price tag of $99 per user per month.

Microsoft has bet big on AI with its cloud platform, Azure, and Copilot, its AI assistant tool. Microsoft's capital spending reached $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.

Analysts have spent months touting Microsoft's ability to boost revenue through Azure and Copilot, which would lead to significant upside for the stock.

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

Fitzsimmons, separately, raised his Microsoft stock price target to $610 from $550 following the "super app" announcement, citing the potential for the new capabilities to generate substantial revenue. Fitzsimmons has an Overweight rating on the stock.

The bullish view is widely held on Wall Street. Microsoft stock has an average Buy rating and a price target of $572.56, based on the 59 Wall Street firms polled by FactSet.

Even with Microsoft stock on pace for its best quarter in more than three decades, shares were up just 7.3% this year as of Wednesday trading. But if Wall Street is right about Microsoft's revenue growth prospects, there may be more quarterly stock returns reminiscent of the 1990s ahead.