Microsoft (NASDAQ:MSFT) shares have delivered an impressive year-to-date return of 61%, riding high on its excellent positioning within this year’s hottest trend, AI.
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But given that the AI journey for many companies using the tech giant’s products is still in its early innings, what lies ahead for Microsoft – and, in turn, investors – looks especially rosy.
That, in any case, is the opinion of Ivan Feinseth, a 5-star analyst at Tigress Financial who is rated in the top 4% of the Street’s stock pros. He asserts that Microsoft is at the “forefront of the AI revolution driven by its continued integration of increasing AI functionality, incorporating ChatGPT across all aspects of its business and product lines, which will accelerate the digital global transformation and highlight the stock’s investment opportunity.”
In fact, Feinseth is so confident in Microsoft’s continued success that he has raised his price target on MSFT to a new Street-high of $475, up from the previous $433. This represents a potential gain of 25% from current levels. (To watch Feinseth’s track record, click here)
While all the big tech names seek to get a piece of the AI cake, due to the growing demand for operational efficiency, its “technology-driven competitive edge,” and an increase in the pursuit of heightened productivity and creativity, Feinseth believes Microsoft is poised to spearhead the AI revolution, one in which it will be “driving change across every facet of enterprise IT and computing processes.”
Moreover, the company’s products, already hugely popular, are seeing increased demand. Boosted by Azure revenue growth and gross margin improvement in the core Azure business, Intelligent Cloud operating margins have reached their highest in six years, while the gains in cloud computing and the adoption of new AI products that are “driving a recovery in enterprise IT spending,” have led to MSFT recently dialing in its biggest sales uptick in six quarters.
It’s not only on the software front where Microsoft is making headway. At its recent Ignite conference, the company unveiled its own custom-designed processors for AI and Cloud. Since 2019, Microsoft has been actively engaged in the development of its own AI processors.
Moreover, as Microsoft continues to make substantial investments in AI and cloud engineering, along with advancing its products and capabilities, the company also continues to make strategic acquisitions. In October, the company completed its biggest acquisition so far, that of gaming giant Activision Blizzard, in a transaction that cost $75 billion.
“MSFT’s Activision acquisition significantly expands its gaming library and game development capabilities, further elevating its gaming industry position and expanding its online subscription gaming platform offering,” Feinseth noted.
Across Wall Street, Feinseth is certainly not on his own with his bullish take. Barring one fencesitter, all 33 other recent analyst reviews are positive, providing the stock with a Strong Buy consensus rating. That said, the $412.03 average target currently makes room for only modest gains of 9% in the year ahead. (See Microsoft stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
