• Microsoft's market capitalization could jump $300 billion thanks to the rise of AI, according to Wedbush.

• "ChatGPT will be the next leg of the growth stool" for the tech giant, Dan Ives said in a research note.

• Ives’ bullish outlook comes after chipmaker Nvidia posted stunning gains last week on the evidence that AI had boosted its sales.

Microsoft shares' 2023 rally will continue thanks to the Redmond-based tech giant's efforts to integrate ChatGPT and artificial intelligence into its business model, according to Wedbush.

"ChatGPT will be the next leg of the growth stool for Microsoft," Ives said Monday in a research note seen by Insider.

"Redmond is just starting to hit its next gear of growth with ChatGPT and AI also adding a new layer of growth to the Microsoft story over the coming years," he added.

Ives upped his price target for the tech stock from $340 to $375 a share – up 13% from its current $333 level, equivalent to adding $300 billion worth of market capitalization.

His bullish note comes the week after Nvidia saw its valuation surge by nearly $200 billion after it issued a second-quarter sales forecast that crushed Wall Street's expectations thanks to the rise of AI fueling demand for its chips.

Ives expects Microsoft to enjoy similar gains as it integrates the intelligent language tool into its Azure cloud business, Bing search engine, and Office 365 suite of products.

"We believe Nvidia's 'jaw-dropping guidance' heard around the world is a direct AI barometer for Redmond as our recent checks confirm the monetization opportunity for Microsoft is happening much sooner than the Street had anticipated in the field," he wrote.

"Over the last few weeks in our numerous conversations with Microsoft customers, partners, and field checks it has become clear to us that the monetization opportunities around deploying AI and ChatGPT in the cloud is a transformational opportunity across the industry, with Redmond in the driver's seat," Ives added.

Microsoft shares are already up 39% in 2023, benefiting from both the ChatGPT craze and traders' expectation that the Federal Reserve will soon pause its interest-rate hiking campaign.

Read more: Big Tech stocks' massive gains this year have made them even more dominant. That could be bad news for investors.

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